What is a Credit Union? Well, it’s not a place to get a latte, although that would be nice. Rather, a credit union is a not-for-profit financial institution that offers a variety of financial services to its members.
Credit unions and banks are both financial institutions that offer similar services such as savings and checking accounts, loans, and credit cards. However, there are some important differences between the two. We’re here to help you learn what type of bank is right for you.
Ownership and Governance
Banks are owned by shareholders, and the primary goal is to make a profit for the shareholders. Credit unions, on the other hand, are not-for-profit institutions that are owned by their members. This means that any profits are returned to the members in the form of better rates, lower fees, and improved services. Members also have a say in how the credit union is run and elect a board of directors to oversee its operations.
Fees and Interest Rates
Credit unions often have lower fees and better interest rates than banks. Because credit unions are not-for-profit, they can offer better rates on loans and credit cards, and higher rates on savings accounts. They also tend to have lower fees for services such as ATM withdrawals, overdrafts, and monthly account maintenance.
One area where banks have an advantage is accessibility. Banks usually have more branches and ATMs, making it easier for customers to access their accounts. However, many credit unions belong to shared branching networks, which allow members to access their accounts at other credit unions. Additionally, many credit unions offer online and mobile banking services, which make it convenient for members to manage their accounts from anywhere.
Benefits of Credit Unions
- Lower fees and better rates: As mentioned, credit unions often have lower fees and better rates on loans, credit cards, and savings accounts.
- Personalized service: Credit unions tend to have a more personal touch than banks. Members are often known by name and can develop a relationship with the staff.
- Community involvement: Many credit unions are involved in their local communities, supporting charitable causes and sponsoring events.
- Financial education: Credit unions often provide financial education and resources to their members, helping them make informed decisions about their finances.
If you’re looking for a financial institution that puts its members first, consider joining a credit union. And who knows, you might even find a friendly face to chat with over a cup of coffee.