Credit Unions Vs. Banks: How To Decide
When deciding whether to go the credit union way or choose a bank, consider many factors. There’s not much difference between the two. However, it’s mandatory to make the best decision.
Convenience is key when deciding where to open
financial accounts. However, more factors require analysis. Worry not, because
both banks and credit union facilities are equally secure. The government
offers insurance to these institutions to increase security and customer trust.
What matters most to customers is ATM availability
and low fees on checking accounts. So, what does it take to decide between
banks and credit unions?
Credit Unions vs. Banks: A Breakdown of Features
Although the same features are available
in credit unions and banks, there are slight differences.
Here’s a full breakdown:
Ownership and Membership
Investors run banks, so customers have no say in
what a bank does. On the flip side, a credit union has a membership. Membership
means that customers have a lot of say in what the credit union does.
Moreover, credit unions are not for profit, unlike
banks that are purely for profit, to give back to investors. Banks also tend to
have more branches and ATMs. Credit union ATMs are fewer than those
offered by banks.
Product Offerings
Banks are well-known for providing personal and
commercial products. These include business loans and credit cards. In
banks, saving and investment programs like Individual Retirement Accounts
(IRAs) are also available. Credit unions are not as diverse. They are
considerably smaller and offer fewer investment products for their customers.
Interest Rates
When applying for a loan, it is best to check what
banks and credit unions offer. Usually, online banks offer lower rates than
walk-in banking facilities. However, credit unions are the best concerning
low-interest rates. They provide the lowest rates on mortgages and car
loans.
Fees
Banks are there to make money, no doubt. Due to
this, these institutions charge higher fees than credit unions. Fees for
errors, especially for standard account owners, are much higher. On the other
hand, credit unions don’t have minimum balances or monthly charges. The fees
charged for bounced cheques are lower than those charged in banks.
Online Services and Technology
Huge banks have more money to spend on technology,
unlike credit unions. Therefore, their services are faster and more efficient.
Mobile banking services are also more advanced at banks. Nonetheless, national
credit unions have much better digital banking options.
Again, the availability of credit union ATMs needs improvement. ATMs increase the customer base
for all financial institutions. It all goes back to convenience.
Pros and Cons of Banks and Credit Unions
While deciding between the two is the main focus
here, it is essential to find out what are their strong and weak points.
The greatest advantage of banking with a credit union is the lower interest and high savings rates.
Moreover, credit unions have strong customer service and low or no
fees. Banks, on the other hand, are excellent for their range of banking
services and retirement programs.
On top of that, there is the convenience of ATMs,
multiple branches, and online banking services. With all that said, credit
unions have minimal financial products, inconvenience customers by lacking
branches, and have no provisions for mobile banking.
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