Many consumers are fed up with the expensive and unsatisfying services of traditional banks in the United States, and they are seeking alternatives. For many of these people, credit unions are an attractive option. Credit unions have significantly improved their services in recent years, and some even rival the nation's largest banks. Most people are able to join at least one based on their job or location, and for many, credit unions offer important advantages over traditional big banks.
Customers Are Owners
A company's upper management must respond to the needs and wants of its owners, and banks are no different. The management of publicly-traded banking institutions often make choices that inconvenience customers while benefitting shareholders who only care about making money. For example, shareholders may embrace management's decision to increase fees and therefore increase revenues, but consumers will suffer.
This is not an issue for credit unions, where customers and owners are the same and decisions are made with everyone's interests in mind.
Credit Unions Are Non-Profits
Credit unions can certainly earn a profit (and need to in order to survive), but more of that money is shared with customers and owners, limiting the pressure to squeeze more money out of customers. The non-profit status of credit unions also makes them exempt from federal taxes, allowing more of the funds coming in to benefit the union.
Lower Fees, Higher Savings Rates
Typically, credit unions offer their customers free accounts without prohibitive minimum balance requirements. Customers usually do not pay fees for services, and the interest rates on certificates of deposit, savings accounts and checking accounts are often far greater than those at traditional banks. Interest rates for credit and loans also tend to be lower, and many credit unions have regulations that fairly limit interest rates.
In a Gallup study sponsored by the magazine American Banker, credit unions have consistently earned higher rankings for personal service than traditional big banks.
Financial Products and Protection
Just as it is with banks, money you deposit at your credit union is insured. While bank balances are insured by the Federal Deposit Insurance Corporation (FDIC), the money at a credit union is kept safe by the National Credit Union Association (NCUA).
Credit unions also provide many financial products, just like banks. Customers can obtain checking accounts, savings accounts, credit cards, business loans, debit cards, mortgages and more from credit unions, and often at lower rates than big banks.