Credit Unions vs. Banks: Which Is Best for You?
Figuring out how to best save up your money can be difficult to navigate with all the options set before you. One of the more immediate choices is between a bank or credit union, and you might be asking yourself, “What are the benefits of a credit union vs. a bank? Which one has lower interest rates on loans? Which one will earn me more money overall?”
Most people know what services your average, modern-day bank generally offers, but the benefits of a credit union are not so widely known. Depending on your situation, when you compare the benefits of a traditional bank to a credit union, the latter may be a better fit. We’ll go over why that may be below.
As previously mentioned, there are benefits and drawbacks to both organizations. However, since most people know what they’re getting into with a big bank, we’ll go over some of the benefits a credit union has to offer in comparison. Credit unions are not-for-profit organizations that are usually linked to certain communities or groups. This means they can offer a personal experience with some more generous financial benefits, such as:
You might be wondering how a credit union is able to achieve all this. Most of it is due to their not-for-profit nature. Any profit is redistributed to all members through interest returns or other means, and there is a lot of cooperative support between members in various forms since members are essentially all part owners of the credit union.
After hearing that all members of a credit union also own it, you may think it a risky endeavor. However, federally insured credit unions are protected by the National Credit Union Administration (NCUA), which ensures your deposits won’t be lost should the credit union fail. It’s essentially the credit union version of the Federal Deposit Insurance Corporation (FDIC), and as such it ensures up to $250,000 in funds.
Some people might also have a concern over credit unions generally having behind-the-times software when compared to the big banks. Fret not, as credit unions are proven to protect your information to the same degree as the banks, and potentially more so as older software architecture is more difficult to exploit and hack. You can rest assured that your money and personal information are as safe with a credit union as with a bank.
So, if a credit union is able to protect your information and ensure your money to the same degree as popular banks, while keeping fees lower and earning you more, what are the downsides?
To be honest, there aren’t any real significant ones! The most legitimate “cons” are they may offer slightly fewer options for loans and credit card perks.
Other than that, most of the commonly attributed downsides are merely myths that could use some clearing up. For instance, a common misconception about credit unions is that it is hard to become a member to have access to their benefits. While credit unions once served very specific populations, membership today is generally very easy to attain. Just about anyone can join a credit union based on where they live, work, worship, or attend school.
Another false rumor is the difficulty involved when trying to access your money in a credit union. However, many credit unions have cooperative agreements which expand their ATM numbers far and wide, and there are various ATM locators you can use to find the nearest one with your respective credit union. Many credit unions also participate in shared branching, which allows you to access your account at another credit union branch.
All in all, there aren’t many genuine downsides to banking with a credit union.
At this point it should be clear that there are, in fact, many reasons to choose a credit union over a bank. There aren’t any genuinely impactful cons to speak of, and the amount of money earned through interest returns and reduced fees (both in frequency and amount) is potentially game-changing. Let’s look at the pros and cons of each option below:
BANKS
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CREDIT UNIONS
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The reason more people don’t use credit unions could be they are simply comfortable and familiar with their long-standing relationship to their bank, or perhaps they are uninformed. Because really, there aren’t many reasons to avoid saving with a credit union, especially when you consider all their benefits:
If you’re a student and are interested in banking or investing with a credit union or seeking a student loan from one, then CUSelect has you covered.