A credit union is a financial institution formed by members of a group which allows those members to pool their financial resources for the use of all members. Unlike a bank with is not owned by the customers who use that institution, a credit union gives its members the opportunity to benefit from the services provided. This may come in the form of higher interest rates on savings or lower interest rates on loans. The goal is to provide members with an organization that provides a variety of financial services to its members while helping them save money and improve their personal finances.
Credit unions are fully insured through an organization similar to the FDIC, which insures the commercial banks, and offers most of the same products and services as those found at bigger banks. To learn more about credit unions which you may be eligible to join or other information about credit unions, consider visiting the official website of the Credit Union National Association for more information. Here we look at a few of the benefits as well as drawbacks of using a credit union versus a traditional bank.
Pros of a Credit Unions:
- Credit unions are non-profit organizations. They are owned by the members, and the members control the capital in the organization.
- Friendly and helpful service. Credit unions want to lookout for their members, and often know their members better which encourages a closer relationship and financial help for members.
- Credit unions are just as dependable as a local bank. They usually are open the same hours and offer the same services (credit and debit cards, checks, car loans, mortgages, online banking, etc.). Often the credit unions even offer much lower interest rates on loans and their credit cards than commercial banks.
- Low joining fee. Credit unions have a low fee to join, usually between just one to ten dollars to open an account and start benefiting from their services.
Cons of a Credit Union:
- The biggest drawback of a credit union is the limited number of branch offices. Usually credit unions only operate in a specific area, and therefore have fewer branches and ATMs. However, many often lower the fee to use another ATM, and some even waive the fee completely.
- Not all credit unions are equal. Some do not offer all services available at major banks. Be sure to find out in advance which services are offered at the credit union you are considering to ensure it will meet your financial needs. It is a good idea to keep a small account at a bank (perhaps a free account) in the event you need their services as well.
- Some credit unions won’t be able to hand out large amounts of money right away if you need to withdraw a large amount. You will get your money, but it might not be that business day.