Growing up, my parents did most of their banking at a local credit union. When it was time for me to get my first checking account when I was 16 years old, I decided to join my parent’s credit union. I didn’t understand the awesome benefits of it until about 5 years later when I would get married, move 2 hours away, and open up a regular account at a traditional bank instead.
We quickly found that our bank was charging us undisclosed fees. They were very unhelpful with any problems we had and we always felt that we were at their mercy rather than the bank working for us. After several issues with our bank, we made the switch to a credit union and never looked back!
I realize that the issues we had could very likely have been localized to this one particular local bank branch and that many other banks are great with awesome customer service. However, the benefits of a credit union outweighed all the negatives of a bank for us.
While we have nothing against regular banks, we have decided to keep our money at a local credit union. There are several reasons why we decided to go with a credit union with the following five benefits being at the top of our list.
1. Fees
Most credit unions have less fees than traditional banks. The fees that do exist at credit unions are often times much less than a bank’s fees.
Our local credit union doesn’t charge for any standard account (checking, savings, vacation fund, Christmas club, etc.) Online bill pay and mobile banking are also free. The only charges that I’m aware of are associated with mistakes that are made by the consumer (i.e. overdrafts, stop payment, etc.) Our previous bank charged us for online bill pay.
Note: We did acquire a fee at our credit union within the past year for receiving a paper statement in the mail. I understand the fee since most people are going paperless, however it was a little frustrating for me that it was added.
2. Customer Service
As mentioned above, we were not happy with our bank. The customer service was awful. We felt like we were just a number to them. They weren’t there to work for us, but rather to make money off of us. I realize that this is a very opinionated reason and I’m sure if you were at a smaller, local bank you may not experience this negative response.
At both credit unions my husband and I have been members at, I’ve always been treated with respect. The tellers know me by name and always send out suckers for my kids. I always receive awesome service and never have a problem asking for specific bills for my cash envelopes.
Because credit unions are much smaller branches and often times only have a handful of locations, they have the opportunity to really get to know their customers.
3. Rates
While we really hope that we never have to take out another loan (besides possibly a mortgage if we move) again, it is a possibility for a vehicle. While I hate debt and hope this never happens, I am very happy with the rates at our local credit union as well as the rates we’ve had on past vehicles at our past credit union for car loans.
Credit unions can offer lower rates because of the way they are structured. While traditional banks are for-profit businesses, credit unions are non-profit organizations which makes them exempt from state and local taxes. This allows them to pass on their savings to you, the consumer, in the form of low interest rates!
4. Member-Owned
Credit unions are technically owned by it’s members. As a member of a credit union, you are a shareholder in the organization. This comes with a few benefits on your part. Most of the time, you will have a vote for a representative for the board of directors of the organization. The board of directors then makes decisions that will directly relate to how the credit union operates.
To me, this makes a credit union more like a democracy rather than a dictatorship. You have a vote. You have a voice. This is much different than a traditional bank who is run by stockholders who own a share of the business with the intent of turning a profit.
5. Minimum Balances
One of the biggest pros for us about credit unions is the very low minimum balance requirement (which is sometimes $0). We have our checking and savings accounts with our credit union along with our emergency fund savings. While we try not to let our balances run low, we like knowing that our money isn’t tied up so to speak. If we needed to drain our emergency fund for an actual emergency, we wouldn’t be concerned with trying to keep $500-$1000 minimum balance like is the case with many banks.
At our credit union, the minimum balance for a savings account is $1 and there is no minimum balance for checking accounts.
I think it’s important to note that most credit unions have limited eligibility as to who can join and, therefore, have an account within their organization. Some are based on where you work, while others can be based on religious affiliations. Our current credit union is just based on the county in which you live. If there is a credit union near you that you wish to join, you can usually find this information on their website.
I realize there are also a few cons to choosing a credit union over a traditional bank that could affect some more than others. A few of these include the possibility of limited locations, limited eligibility as mentioned above, and few options for loans or accounts. However, the benefits far outweigh these cons for us. I’m sure we will be life-long credit union members!
I like the idea that a credit union is like a democracy. I also like that you can the chance to vote for a new board of directors. I got to say I didn’t know much about credit unions but they seem like a great alternative to regular banks. Thanks for the information.
Credit unions definitely sound like they have some advantages over banks. I had no idea that even customer service was better at credit unions, that is interesting. Plus, the fact that it is member owned gives a certain peace of mind, thanks for the information.