Advantages / Benefits of Credit Unions
Many people are familiar with both credit unions and banks, but really don’t know how they differ from each other. Credit unions, unlike banks, are member-owned, not-for-profit cooperatives. They exist to serve the needs of their members and offer the same types of products and financial services you would find at a bank.
Member vs. Customer
- At Credit Unions, you’re a member, not just a customer. One of the benefits of a credit union is that each member is also a part-owner. Regardless of how much money you have on deposit, each member has one vote in electing board members for the organization.
- At banks you are simply a customer. Bank’s customers have no ownership interest in their bank and are not able to elect their board members.
Not-For-Profit vs. For-Profit
- With Banks, being for-profit corporations, their earnings are paid to stockholders.
- With Credit Unions, being not-for-profit, earnings are paid back to members (via higher savings rates and lower loan rates).
- Because of this, you’ll often get better rates on loans and typically earn more on deposits
- You’ll typically pay lower fees as the credit union passes on savings to members.
- Better customer service is common. Credit unions typically provide superb customer service because they tend to be smaller organizations than banks, and often know their members by name.
- Credit unions’ board members are comprised of volunteers that are members of the credit union and are elected by the membership.
- Banks’ board members are paid, may not be a customer of the bank, and are elected by stockholders.