Consumers have been increasingly driven to seek financial alternatives to the biggest national banks in recent years. New and growing fees for basic banking products and a series of scandals have left many bank customers unsatisfied with many of the larger financial institutions. If you are considering moving your bank account from a big bank, you should take a closer look at the advantages of credit unions. Credit unions can provide some surprising advantages and can outperform the biggest banks when it comes to many basic financial services.
Credit unions are not a new concept, but many people do not understand what they are. Credit unions focus on their local community while many banks have a national or even international focus. Banks operate on a for-profit basis and exist to serve stockholders, while credit unions are not for-profit and are meant to serve members. There are many quantifiable benefits for individual consumers who are considering switching from a large bank to a credit union.
Checking Accounts
Checking accounts are the most-common deposit option for consumers, used for depositing income, paying bills and making regular purchases. Big banks have been making significant changes to their checking account offerings and fees to make up for increased regulatory costs and new limitations on their ability to charge certain fees. The potential for additional fees is high because of the frequent transaction activity of checking accounts.
Most banks have eliminated free checking accounts for most customers and many who use banks must now maintain a minimum balance or satisfy other requirements to avoid being charged monthly fees. Most credit unions have been able to maintain truly free checking accounts for their members. This translates to savings of more than $100 per year on average for credit union members.
Savings Accounts
Another benefit of credit unions is that they can also offer higher deposit rates for consumers with extra funds than the large banks do. For a basic savings account, the big banks are currently offering effectively no interest and their five-year certificates of deposit have annual percentage yields of less than 0.75%. On the other hand, credit unions are averaging more than 0.15% in interest for a typical savings account and 1.42% APY for a five-year CD.
Account Access
Some consumers are wary of switching their accounts to a credit union because they think that they will have limited access to branches and ATMs. To address these concerns, most credit unions are members of the CU Service Center network. This allows members to conduct banking transactions at any credit union within the network. Many credit union members have access to nearly 5,000 credit union branches nationwide. Many are also part of a surcharge-free ATM network, with the largest of these networks including more than 30,000 ATMs nationwide.