Why choose a credit union instead of a bank?
Fewer Fees
Credit unions go beyond standard banking, offering lower fees on loans, higher dividend rates on accounts, and more personalized member benefits. Unlike for-profit banks focused on maximizing shareholder profits, credit unions are member-owned, non-profit financial institutions.
Credit unions can be ideal for a low-interest loan, lower mortgage closing costs, or reduced fees, but you'll need to qualify for membership. Larger banks may offer you more choices regarding products, apps, and international or commercial products and services, and anyone can join.
- Credit Union Benefits.
- Better Rates on Savings Products.
- Lower Rates on Borrowing Products.
- Lower Fees.
- Member-Owned Financial Services.
- Up to $250,000 Insured.
- Perks and Free Education.
- FAQs.
- Lower borrowing rates and higher deposit yields. Credit union profits go back to members, who are shareholders. ...
- Variety of products. ...
- Insured deposits. ...
- More personal service. ...
- Educational resources. ...
- Member-owned.
With a credit union, you might have to do some extensive research to compare accounts and find out what services they offer. Credit unions only serve certain groups of people and if the ones you can join don't have mobile banking or their apps aren't up to par, that could potentially be a major disadvantage.
Credit unions operate to promote the well-being of their members. Profits made by credit unions are returned back to members in the form of reduced fees, higher savings rates and lower loan rates.
| Financial Institution | Why We Picked It |
|---|---|
| Blue Federal Credit Union | Best Overall |
| Liberty Federal Credit Union | Best for Checking |
| Alliant Credit Union | Best for a Savings Account |
| Service Credit Union | Best for Military Individuals & Families |
One question that often arises is, "Are Credit Unions Safer than Banks?" If you're looking for a short answer, you'll be happy to know that we're not making you read the whole post: Credit Unions and banks are roughly identical in safety because deposits at both are insured by the Federal government to $250,000.
Higher Savings Rates and Lower Loan Interest Rates
Make credit unions your first stop when considering other types of loans, too. From car loans to mortgages and business loans, you may be surprised by how much more affordable your local credit union's offerings are compared with traditional big banks.
What is a weakness of a credit union?
Weaknesses of Credit Unions
Membership is restricted. The membership of a credit union is restricted to a specific community, most often a religion, profession, or geographic location. For a member to be eligible to join a credit union, they must belong to a group listed in the credit union's charter.
Credit unions are a great option for many people, and they provide a range of perks that big banks simply can't, such as a more personalized banking experience, lower rates on loans, and higher rates on savings accounts.
The main difference between the two is that banks are typically for-profit institutions while credit unions are not-for-profit and distribute their profits among their members.
Credit unions typically offer lower interest rates on loans and higher interest rates on deposit accounts, as well as lower fees than banks. They also tend to offer more personalized customer service and have a stronger focus on serving their local communities.
Overall, credit unions offer higher savings rates, lower loan rates, and have fewer and lower fees when compared to banks. According to a study by Informa Research Services, credit unions have lower average rates on credit cards, auto loans, personal loans, and home equity lines of credit.
Credit unions also tend to have lower fees than banks, and in some cases, no fees at all. Since credit unions are not-for-profit, they don't have to worry about making a profit for shareholders, so they can pass on the savings to their members.
Credit unions may be local or regional, with limited branches outside of your area. If you travel or move, this can make getting in-person help difficult. May have fewer services. While many larger credit unions offer all of the same services banks do, some provide a limited range of products and services.
Choosing between a bank and a credit union may involve some tradeoffs on interest rates, technology and tools, and ATMs and branches. Interest rates: On average, credit unions tend to offer higher rates on deposits and lower rates on loans. (Check out average bank interest rates for savings accounts, CDs and more.)
Like banks, which are federally insured by the FDIC, credit unions are insured by the NCUA, making them just as safe as banks. The National Credit Union Administration is a US government agency that regulates and supervises credit unions.
The downside of credit unions include: the eligibility requirements for membership and the payment of a member fee, fewer products and services and limited branches and ATM's.
How much money should I keep in a credit union?
Consumer finance experts recommend that people maintain about five to six months of cash in their savings account to cover medical emergencies, mortgage or rent, utilities, loan and payments, and other necessary expenditures.
The largest credit unions in the U.S. include Navy Federal, State Employees', PenFed, Boeing Employees', SchoolsFirst, Golden 1, America First and Alliant.
Two credit unions offer high-interest checking accounts: Landmark Credit Union Premium Checking with a 7.50% APY and OnPath Credit Union High Yield Checking with a 7.00% APY. Eligibility for these credit unions is limited according to geographic location and other narrow criteria.
Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.
1. Navy Federal Credit Union. Founded in 1933, Navy Federal Credit Union is the largest national credit union in terms of both assets and membership.
