Advantages of Credit Unions

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.

Primark

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21 thoughts on “Advantages of Credit Unions

  1. Financial Success for Young Adults

    I see that there will be a big move into credit unions soon. Especially if the national banks keep making changes to their policies that force customers to move. I mean, who wants to pay a 5 dollar fee each month when there is a bank that will not charge that fee?

    1. admin Post author

      And those fees are just the tip of the iceberg… fees will become more commonplace as banks struggle to turn a profit by traditional means.

    1. admin Post author

      Credit unions are the way to go. I also see a shift leaning towards online-only banks, the brick & mortar era isnt necessarily on it’s way out, but definitely on the decline.

  2. 101 Centavos

    Maybe this latest debit fee move by the big banks is a just a ploy to drive away smaller customers? I need to look into local credit unions a little more…

    1. admin Post author

      That’s an interesting way to look at it…They very well may be doing that. Though it puzzles me why they come out with all of these new iPhone and Android banking apps. It seems to me that the customer base that wants those apps are going to be younger, and ultimately make up a larger portion of the smaller customers.

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    1. admin Post author

      They definitely offer better rates than banks… which is a plus if you have to park your money there. However, I dont think there is anything great about interest earned within a bank or credit union. Inflation has you beat regardless.

  4. Maqggie@SquarePennies

    It seems all of the consumer outrage about the fees for using a bank debit card is having an effect. Some of the big banks are saying they will not follow Bank of America in charging to use their debit cards. Yay consumers! November 5th is Bank Transfer Day when many people pledge to move their accounts from big banks to their local credit unions. We’ll see how many follow through.

  5. Niki

    I have actually never had a bank account. I was lucky enough to start off with a credit union. I will sing their praises all day long.

  6. Liz

    I worked in a bank just before the era of fee-abuse began. It was a great place to work – and to bank – back then. Once the fees started to proliferate I couldn’t imagine working in a bank. I *love* my credit union. It’s in the city but has only one branch (that’s 75 years old or so), and “real live people” answer the calls – and handle your problems. Not to mention the interest and lack of fees on my checking account. Credit unions – the way banks are supposed to be.

  7. shanendoah@The Dog Ate My Wallet

    We’ve been with our credit union for a few years now and love it. I was lucky enough that my very first account (which I still have) was with a credit union. It’s actually our emergency emergency fund, as we always forget it exists and we can only access it via calling the credit union in the town I grew up in.

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