We love credit unions, and we want to shout it from the rooftops! Our friends at NerdWallet are here to help us shout about it.
Why should you consider a credit union?
Choosing between a bank and a credit union can seem like a toss-up. Each generally offers similar financial services, including checking and savings accounts, loans, credit cards, certificates of deposit, money market accounts, 24-hour online capabilities and a nationwide ATM system.
There are some potential tiebreakers to consider, however: Would you like to be a “customer” or a “member”? A “client” or a “co-owner”? Does the institution’s big boss work 2,500 miles away, or is he or she in your town? Is the board of directors composed of corporate careerists primarily devoted to stockholders, or is it made up of your neighbors and co-workers working for the good of you and your community?
Credit unions like Great Basin Federal Credit Union are not-for-profit institutions with a mandate to serve their communities. Just like in your home, everything left after paying the bills goes right back to the community “family,” here in the form of lower loan and credit card rates and higher return on your checking and savings accounts.
Low rates and fees
Because credit unions are member-owned, they offer low interest rates on credit cards and loans. For example, the average interest rates on four-year and five-year new-car loans at a credit union were a full 2 percentage points lower than what banks charge in March 2016, according to the National Credit Union Administration’s statistics. That can save you hundreds of dollars in interest over the life of a loan.
You can also get mortgages and home equity loans at a credit union, often with greater ease than at a big bank. The loan officers at a credit union work with members to help get the best loan possible. They know members personally and look at more than just an applicant’s credit score.
For basic banking needs like checking and savings accounts, credit unions often outperform the big banks by offering checking accounts that don’t charge maintenance fees and don’t have minimum balance requirements. Deposits up to $250,000 are insured by the NCUA.
Credit unions have a specified mission of promoting thrift and providing access to credit to their members, especially those of modest means. Because of that, they are more likely to work to get loan requests approved, even when a member’s credit history doesn’t quite fit the mold, to get that member the financing he or she needs.
Big banks, on the other hand, tend to have inflexible loan criteria that can make approval difficult for those who have blemishes on their credit history. Because of that, approval rates for both personal and small-business financing are higher at credit unions than they are among other financial institutions.
Credit unions also are noted for their friendly attitude. The American Customer Satisfaction Index compares banks and credit unions on the basis of expectations, quality, value, loyalty and complaint rates. In 2015, 81% of credit union members were satisfied with their financial services, compared with 76% of bank customers.
Lynn Mucken, NerdWallet
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