Many people use banks to save money, deposit their paychecks, and open saving accounts for their children. But many people have left banks to do business with credit unions which are becoming more and more popular. There are some very good reasons why people are leaving banks and heading to their local credit union.
Differences between banks and credit unions can be vast. Banks are for-profit organizations, so their interest is to make money for themselves. Credit unions don’t operate in the manner. Credit unions are member-owned non-profit organizations. Banks tend to charge all sorts of fees and charging high loan interest rates to help their bottom line. Credit unions take their profits and they use them to offer lower interest rates and lower fees as well as higher savings account rates to their members.
The main idea behind all of this is that this is member-owned. This means that anyone who is a member is a part-owner of it. Membership in a credit union does have its advantages over traditional banks.
Credit unions offer lower interest rates on loans. Those loans include car loans, credit cards, and home mortgages. It’s realistic that a person can same a bunch of money over the course of a home loan. And, banks tend to make sure you have a minimum balance in your checking account, whereas credit unions don’t. That also translates for savings accounts, and, if you’re needing to use extra money from those accounts for a certain expense, you don’t have to worry about dipping below the minimum balance limit.
Applying and securing a loan from a traditional bank can be difficult. Unless you have really good established credit, you may not be able to secure that loan. Credit unions, once you are a member, are more forgiving when they look at your credit score. In addition, if you don’t have any credit to start with you still may be able to secure a loan to suit your needs. Credit unions tend to work with you on less than stellar credit.
Some credit unions offer to help you when you want to improve your credit rating. Many offer credit counselors to sit down with you to evaluate where you are with your credit rating, and then get a plan together with you to increase your credit score. These credit counselors show you how to get out of debt that can hinder your financial progress.
Credit unions do offer to help in their immediate community. Some offer scholarships to students or participate in fundraisers. They are a financial institution that truly tries to help their members wherever and whenever they can.
Higher rates on savings accounts are a part of what a credit union does. Again, they are non-profit, so they can offer these higher interest rates to their customers. This is an added bonus when opening a savings account for one of your children. This helps teach them the power of saving for the future.
If you aren’t sure where you can look for a credit union, go online and search for “credit unions in my area“. This will help you decide which credit union is the right one for you to apply for and become a member. Credit unions offer many more products to their members because the success of their members translates into the success of the credit union. When searching for a credit union that suits you, search for “credit unions in my area” and you’ll find the right one to become a partner with.