Credit Unions vs. Banks

Which do we recommend?

The short answer is credit unions because they often have less fees, more flexible rules, friendlier staff, lower interest rates for loans, and a higher interest for savings, but the one reason you may want to go with a bank is that there are more locations nationwide for you to walk into. On the other hand, with the rise of mobile banking and credit unions offering access to thousands of ATM’s within their CO-OP this is now less of an issue.

What’s the difference?

Ownership vs. Membership – Banks are typically owned by investors which means they are dead set on turning a profit, often at your expense. Being a for profit company means they are often more strict and their fees are usually higher. Credit unions are not-for-profit and as a member you are part owner. They exist to benefit you and their other members which means they’ll be more attentive to their customers needs and more likely to want to build a relationship with you.

Services – Credit unions tend to offer all the same services as banks do, but may have fewer offerings in the investment products department.

Fees – Banks usually require that you keep a minimum balance and may even charge you a penalty fee for not having enough money! Their penalties may also be more harsh when it comes to errors such as overdrawn accounts and bounced checks.

Interest Rates – Data taken from the year 2020 has shown that people are receiving lower interest rates for home and auto loans with credit unions as opposed to banks. That means big savings for you. That data also shows that they are receiving better interest rates on their savings accounts, and CD’s which translates to more money in your pocket daily! To get the absolute best interest rate with a credit union or a bank you have to have good credit. If your credit rating is less than perfect give us a call and we can improve your score in the first 30 days.

Mobile Banking – In the past big banks have had the leg up on technology because they have more access to resources, but as of late credit unions have caught up and leveled the playing field.

How do I become a credit union member?

Credit union memberships are often offered to people in certain professions like teachers or those in the military, but there are also some for people within a geographic location, religious groups and most will let people invite their friends and family. There are some that even offer membership for as little as $5. You’re bound to find one near you that’ll provide all the functions of a normal bank without all the unnecessary price gouging. If your goal is to save and make the most amount of money, a credit union is your best bet. For more financial literacy info give Powerhouse Consultants a call and we can help you reach your financial goals.