The material presented here is for educational purposes only and is not intended to be used as financial, investment or legal advice.
What Are the Benefits of a Credit Union?
Banks and credit unions provide people a safe place to keep their money, but the benefits of a credit union far outweigh those of a bank! As not-for-profit institutions that are member-owned, they share their profits with members through lower fees, higher dividend rates on savings, lower interest rates on loans, sweepstakes, cashback rewards, scholarships and more.
Banks and credit unions are financial institutions that provide a similar range of products and services, but credit unions have distinct advantages over banks. Primarily, banks have shareholders and operate to make a profit, while credit unions are not-for-profit institutions that are owned by and share profits with their members.
5 reasons to switch to a credit union
- Lower Fees
- Lower Interest Rates
- Higher Dividends
- Perks Like Cash Rewards
- Helping Your Community
Let’s take a look at some of the ways credit unions give back:
Credit Union Benefit #1: Lower Fees
As corporations that must turn a profit to satisfy their shareholders, banks tend to have higher fees attached to their products than credit unions. For example, checking accounts at banks will often have a maintenance fee and/or a minimum account balance. Fees for bounced checks and other errors may also be higher at some banks.
Credit Union Benefit #2: Lower Interest Rates
As not-for-profit organizations that generally have lower overhead costs than big banks, credit unions can afford to collect less interest on home loans, auto loans, unsecured loans, credit cards and more.
Credit Union Benefit #3: Higher Dividends on Savings
Annual Percentage Yield, or APY, is the amount that you earn from savings, money market or other interest-bearing accounts. The APY on savings accounts and deposits is higher at credit unions than the national average rate at banks. According to data from the NCUA, a 5-year share certificate at a credit union will earn at a rate that is 13% higher on average than the interest rate on a comparable 5-year CD at a bank. When you park your money in a credit union, you give it more earning power!
Credit Union Benefit #4: Cashback Rewards, Sweepstakes & More
Many credit unions choose to give back to their members through reward programs, contests and other great perks. For example, credit unions like Desert Financial offer cash bonuses and credit card offers where members earn cash for spending a specified amount of money on a new credit card during a set amount of time. Other credit unions will host occasional sweepstakes and contests in which one lucky member will walk away with a fun prize or a bundle of cash. Some credit unions also offer scholarship opportunities through which eligible members can use credit union-sponsored funds for textbooks, tuition payments and other qualifying education expenses.
Credit Union Benefit #5: Community & Charitable Support
Credit unions pay it forward by sharing their profits with nonprofit organizations and causes. As institutions that are invested in the success and well-being of their community, credit unions are also known for supporting local initiatives and charities. When you choose to invest in a credit union, you too are choosing to pay it forward.
When it comes down to it, banks and credit unions may provide their customers and members with similar financial products and services, but the many benefits of credit unions help build stronger members, organizations and communities. When you join a credit union, you become part of something bigger. Rather than having your money go toward making a bank’s stakeholders happy, you are helping your fellow credit union members and your community!