If
you're debating between a credit union or a conventional bank, it’s important
to keep in mind the vital distinctions such as rates of interest and branch
accessibility to identify which elements are essential to you. Let’s list some
primary differences below to help you decide which is the right choice for
you.
The
Important Distinction
On
the surface, banks and credit unions may appear very similar. After all, both
are equipped to accept those convenient automatic deposits. Both are also able
to provide people access to checking and savings accounts, credit cards and
loans. The differences lie at the very core of the operations, and they’re
significant. Banks are for-profit institutions that generally strive to earn
shareholders money. Credit unions are not-for-profit, member-owned
cooperatives. Essentially, account holders are a means to an end for banking
institutions. At credit unions,
members are served each and every day. Credit
unions exist to offer a group of individuals linked by a certain bond which
might be based upon location, company, belief, subscription, or various other
variables.
Considering
the fundamental differences between banks and credit unions, members of a
credit union are likely to find a high level of service is provided to them no
matter how much – or little – money is placed into an account. Credit union
membership also tends to provide individuals with benefits that go beyond
service, including:
• Higher interest rates on deposit
and investment accounts – Credit union members typically receive a higher
return on their financial investments, such as savings accounts and
certificates of deposit. Since credit unions work on members’ behalf and not
shareholders, profits made benefit members directly.
• Low interest rates on credit cards
and loans – Credit unions are also generally able to provide their members
better rates on money borrowed. Since credit unions do not have to earn huge
profits to satisfy shareholders, they reinvest money earned for their own
members. Oftentimes, that reinvestment translates into lower rates.
Making
the Best Decision for You
People
have many choices on where to put their hard-earned dollars. Credit union
membership provides a distinct advantage for people who wish to enjoy a higher
level of service and greater value attached to the financial accounts they
hold. From lower rates on loans to higher earnings on savings, credit unions
are all about serving their members.
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