This isn’t my first post on credit unions, and it certainly won’t be my last. The last I tackled this topic I gave you the five primary advantages of credit unions over banks. Well, that list keeps growing, as does the list of general advantages of being a credit union member. The benefits extended by a credit union are simply untouchable by banks because they aim to serve their members, rather than return profits to shareholders. Simple math tells us that reinvesting your profits into the business will yield more financial advantages for the account holders.
There has been quite a bit of hype in the media recently about a certain bank ( B of A) and their financial troubles. They are looking at laying off as many as 30,000 employees. HSBC in London is planning a similar number of layoffs. I don’t know about you, but I have personally dealt with Bank of America’s customer service on several occasions so far, and a series of layoffs that large certainly won’t help them improve any. Credit unions typically deal with a smaller pool of account holders, and those accounts holders are the equity holders in the business. Thus, they are usually treated with more respect and efficiency. Employee layoffs are less common (perhaps with the exception of the financial meltdown) then the larger banks. Employee retention and experience is important when it comes to any business.
Banks are constantly changing their rules! I understand that in order to profit you have to sometimes adapt to the changing business climate. However, nickle and diming the people that allow you to even remain in business, isn’t very smart. Account inactivity is the new bank fee bandwagon that many have jumped on. It’s gotten to the point where you have to pay fees if you don’t process enough transactions out of your checking account. I thought the banks wanted us to save money? Perhaps you want to stash aside some spending money for a vacation or Christmas, you better make sure it’s over the banks account minimum otherwise one month in transactions fees will eat up your interest earnings. My credit union allows me to setup a temporary account to save up for one-time expenses such as these. No additional fees, no account minimums, and most definitely more attractive short-term rates than I would be offered by the larger banks.
I have to say out of all of the bank fees that have come about, the most atrocious is the recently announced debit card fee. Bank of America (and some others) have said they will charge $5 a month to customers who use their debit cards at the point of sale. So if you are one of those people that avoid getting ripped by the ATM fees and just swipe your debit card, then your out of luck either way. Wells Fargo is another bank that is contemplating a $3 debit card fee in order to offset a recent decline in quarterly revenue. As profit margins thin out, these banks are forced to find ways to increase their bottom lines. I believe credit unions are poised to take advantage of these changes, and that many of the big banks are going to begin losing accounts to them.
I would say that the biggest advantage a credit union has over a bank is their tax exempt status. Because credit unions are non-profit they qualify for an exemption from paying corporate income taxes. Obviously this a huge financial advantage over for-profit institutions. This allows a large sum of money to be returned to the members in the form of lowered fees and rates.
There are just too many reasons to avoid passing up credit unions! With all of the negative changes expected at the larger financial institutions over the next year, I hope it’s enough to finally convince you to go out and find a suitable credit union near you.