At first glance, credit unions look just like a typical bank. They offer many, if not all, of the same financial products. However, the closer you look reveals just how different they operate, and the many benefits credit unions offer that banks simply can’t.
What are Credit Unions?
Credit unions are not-for-profit financial institutions owned by the people who use its financial offerings. Credit union account holders can access the same kinds of products and services offered by a traditional bank, such as checking and saving accounts, credit cards, personal loans, investments and insurance.
One of the biggest differences is that credit unions are not-for-profit organizations so they’re accountable to the account holders (owners) instead of shareholders like banks. Credit union account holders have the opportunity to vote and elect a volunteer board of directors to manage the credit union. Because of the structure and ownership, credit unions are able to offer account holders better rates and higher savings than for-profit banks.
Credit Union Advantages
- Lower Interest Rates on Credit Cards and Loans: Credit unions offer some of the lowest interest rates on credit cards and other financial products. This can amount to substantial savings if you carry a credit card balance or take out a loan.
- Higher Interest Rates on Deposits: You typically receive a higher yield on deposits made to a credit union account. Over time, this significantly adds up and gives you more flexibility to make your money work for you.
- Lower Fees: Credit union products often have lower fees than banks. Some credit unions even waive fees entirely on bank accounts and other financial products, making it easier for everyone to maintain an account.
- Personalized Customer Service: Credit unions are founded to serve and offer a “people helping people” approach to the communities they serve. They also have an outstanding reputation for providing more personalized, localized and responsive customer service.