I recently read an article on a very credible personal finance site listing 5 reasons that banks are better than credit unions. I have to say, I disagreed with every reason listed. Credit unions offer many benefits over banks, and I’m going to tell you 5 reasons why you should join one.
1.) With a credit union you are a member, or a stakeholder. With a bank you are simply a customer. Banks are for-profit institutions and their goal is to make money for the stockholders of the company. A credit union is not-for-profit entity and their goal is pass through the profits to the members. This comes in the form of added member benefits such as low fees and low rates.
2.) It’s a misconstrued opinion that credit unions have limited branch and ATM locations. However, many credit unions belong to larger networks, such as the Credit Union Service Centers. I joined my credit union 6 years ago, they had a branch located within office building. I have since left that company, and yet I retain my account all these years later. I have 3 locations within 5 miles, and many more available ATMs than that. Meanwhile, 2 of the 3 largest banks in the United States only have 1 location each within 1 mile of my home (Bank of America, and Chase Bank).
3.) Most credit unions offer credit cards just like a typical bank. What isn’t so typical are the exceptionally low APR rates they offer. At my C/U, there are two credit card rates, 6.99% fixed for those that direct deposit 100% of their paycheck, and 8.99% for everyone else. Go ahead and search for credit card rates lower than that, I can guarantee you won’t find them. I had a Citi Platinum card for 7 years, and after the recession they raised my rate to 18.9%. C/U credit cards offer comparable rewards just like any others as well.
4.) As I said before, credit unions have many available ATMs, but they are also fee free! The average fee for an ATM is $2.33 and is on the rise. Now if you use your bank issued ATM card at a third party ATM, then you just doubled your fees. With a credit union ATM card, you can withdraw your own money fee free as long as it’s at a participating ATM. Even if you withdraw money from a third party, you may have to pay their fee, but most credit unions don’t charge for the transactions themselves. I’m too busy to walk into a branch office every time I want to withdraw some money, and I feel that I shouldn’t have to pay hefty fees when I do.
5.) At a credit union, credit cards, home equity loans, mortgages, auto loans, and personal loans all enjoy lower rates than you will find at a bank. At the same time, savings, checking, money market, and CD’s have higher rates. I don’t typically endorse putting any significant amount of your money into savings and CD’s as inflation tends to outpace them, however, most people feel more comfortable doing so and they might as well earn a higher rate!