Consider beginning a banking connection with a company that isn’t a bank at all: a credit union, if you want to transfer banks or are shopping for a new mortgage, vehicle loan, savings account, or other financial goods.
Banks and credit unions offer many of the same products and services. However, a credit union can be the best option if you want to preserve your money with a charity that provides your community with specific perks and financial support.
Explore credit unions’ functions in further detail to see why they may be such a valuable spot for your personal money.
A credit union: What Is It?
A credit union is a cooperative, nonprofit financial institution with member ownership. Credit unions are owned by its members, who are also their customers, as opposed to banks, which are owned by shareholders and must transfer earnings to their owners. Credit unions have more than 122 million members in the United States.
Many of the financial services and products that banks offer are also provided by credit unions. However, a credit union could refer to its accounts and services by slightly different terminology, such as “share draft account” rather than “checking account.” Customers of a credit union are member-owners, therefore rather than payment processing the “interest,” the credit union pays “dividends.”
The basic truth is that the purpose of credit unions is to provide a secure environment where members may save and borrow money at affordable rates. Credit unions can occasionally provide major variations from banks and give some unexpected benefits to its members due to their nonprofit structure and community-oriented goal.
What Credit Unions Offer
The primary goals of credit unions are to enhance its members’ financial security and give back to the community. When you join a credit union, you may take advantage of a number of significant benefits.
Rates for loans and savings accounts are improved
The goal of credit unions is to offer competitive rates to their members. Credit unions frequently pass on their earnings to its members by providing higher APYs on savings accounts and CDs and lower APRs on loans since they do not have to pay profits to shareholders as do banks. The finest checking accounts, high-yield savings accounts, and CD rates are available from credit unions.
Outstanding customer service
When compared to banks, credit unions often receive higher ratings from customer satisfaction surveys. In one study, 96% of credit union members rated their credit union as “very happy,” according to Consumer Reports. A credit union’s members are also its owners, therefore these organisations are frequently particularly focused on offering customer care at a level that not every bank may be willing or able to match.
Credit for Needy Borrowers and Small Businesses
Credit unions frequently offer loans to smaller companies that larger banks may neglect or underserve. Being a member of a credit union may be beneficial whether you are a small company owner or just wish to support local small companies.
The goal of about 50% of credit unions is to assist low-income areas. Credit unions aim to provide their neighborhood community with accessible financial services, regardless of the type of city, town, or neighborhood individuals reside in. By providing reduced fees, better returns on bank accounts, and savings of $5.6 billion on vehicle loans, credit unions assist its members in saving $12.6 billion annually.
People who may otherwise be paid excessive fees for check-cashing services or pay higher interest rates on the automobile loans they need to travel to work can benefit greatly from credit unions. Credit unions create $4.9 billion in economic benefits annually only by participating in the local banking markets in their areas.