Making informed decisions has never been more difficult. We live at a time when internet-driven misinformation clouds issues and perpetuates myths. This holds particularly true when trying to make an intelligent credit union vs bank choice. However, a fact-based deep dive shows that people from all walks of life may be better served by working with a local credit union.
Debunking myths and misinformation about credit unions vs banks will not only prevent misinformation from rearing its ugly head in the future, but it will also help people make fiscally responsible decisions today.
People who haven’t worked with a credit union are often persuaded by this myth. The conventional thinking is that there must be a difference between the two and that credit unions offer fewer services than a big bank. Nothing could be further from the truth.
The vast majority of credit unions provide the same services as corporate banks. If you need a checking account, savings account, car loan, mortgage, HELOC, or low-rate credit card, a credit union offers these services and more. In fact, since credit unions are member-owned they often offer additional services to their members such as youth-centric financial guidance and account options for different age groups from little children to young adults. Youth Accounts are designed to educate and teach financial independence at an early age.
This myth has its roots in some truth, but it has been grossly exaggerated. The people who can become members of a credit union are usually restricted to a certain group. Some credit unions are designed to serve employees. Others cater to residents within a regional community. To join a credit union, simply inquire what it requirements are necessary to join. After that, it’s just a matter of joining the credit union and opening an account.
It might be safe to say that credit unions may offer different rewards programs than a specific bank. The fact is that wide-reaching organizations offer reward programs to attract new customers. Just think about how many retail outlets and gas station chains offer discounts and rewards cards. Credit unions often offer credit union reward programs, such as credit card rewards, that are tailored to their membership. If there is a credit union vs bank difference, it’s that the former typically saves people more money overall. Credit unions may also offer members discounts and promotions by partnering with other businesses thereby allowing them to reap the benefits.
It seems counterintuitive that a myth persists claiming credit unions aren't tech-savvy. Even a cursory look at the mobile banking options and digital access indicates otherwise. Credit unions make online baking easy for members to conduct online transactions. The mobile tools used by members are equal if not more intuitive than big banks. With your smartphone you can typically pay bills, review transactions, check balances, move money and make deposits.
Credit unions' technology experts ensure they're integrating emerging technologies that streamline the member experience. They also maintain robust cybersecurity protocols to ensure protection of their members’ information.
Although credit unions and banks may offer many of the same services and benefits, there is an underlying difference. Banks are effectively owned by shareholders who invest their wealth with the expectation of turning a profit. Bank CEOs are compelled to generate these through fees and higher interest rates. The customers who take out accounts, loans, or use the institution’s credit cards are paying those pass-along profits.
By contrast, a credit union is owned by its members who have equal stake in the organization. Profits earned above expenses are returned to members in the form of lower fees, lower loan rates, and higher earning on savings accounts. Not to mention, credit unions are a not-for-profit financial cooperative that advocates financial education, smart saving habits and sound credit use to enrich the lives and financial well-being of it's member-owners.
Because credit unions operate under a mandate to provide low-interest lending and financial services to members, loan professionals enjoy greater approval flexibility. This means work history, bill-paying consistency, and other factors may be considered alongside a person’s FICO score. This can be to the advantage of people with borderline credit histories.
Credit unions can also help people build a robust FICO score through secured credit cards and other opportunities. But the most important thing to keep in mind is that credit unions are in a position to offer low rates on car loans, mortgages, and other borrowing options. Regardless of your credit history or score, working with a credit union opens doors to money-saving opportunities.
When you're looking into a financial institution, you want an organization that supports local businesses, charitable organizations, your local community — and most importantly, you. Make your next best financial decision today and apply for membership to a credit union. At Peach State, we pride ourselves in providing quality products and services for members and supporting the communities in our footprint. If you have questions please contact us today!