Five reasons to use a credit union instead of a bankJun. 14, 2018
Ease of service
Here’s a fun game. Call a bank with a simple request, like checking the balance of a savings account. Count the number of irritating phone tree menus you have to sift through before you could talk to a real person who could answer your question. You win when you get frustrated and slam the phone down in anger.
For-profit banks have earned a reputation for cumbersome customer service and out-of-touch policies. Getting information on financial services, like credit repair or auto loans, means sitting on hold for hours. Credit unions, on the other hand, provide easy-to-use services and real, live human beings who can answer questions, make recommendations, and help you understand the complicated world of finance.
For-profit banks answer to owners. They expect a predictable, stable rate of return on their investments. This demand puts a straitjacket on lending and ensures those practices never deviate from a predetermined formula. Take income, multiply by credit score, divide by two; that’s the interest rate they’ll charge.
However, let’s pretend you just got a new job, so last year’s tax returns aren’t a good indicator of how much you are earning. That’s not in the formula, so it doesn’t matter. Credit history ruined by an old medical bill? Banks stop reading after the first three words of that sentence. In short, there’s no room for flexibility and interest rates tend to be much higher.
Credit unions are community institutions, so helping people out is part of what they do. Their rates tend to be lower than those of banks. They also tend to be more willing to make exceptions for details that may not be reflected in the conventional lending formula.
Online banking is everywhere
In the wild west days of the internet, only banks could afford online banking. Now, the internet is everywhere and credit unions are on board. The services you use every day, like online bill pay, depositing checks, logging in with the touch of the finger, and checking accounts balances are just a click away. Most people don’t handle paper checks anymore, so banking from the computer or smartphone is all most consumers really need.
Banks have historically made a killing by keeping people in the dark about their practices. Credit card companies made it hard to tell exactly how much interest you were being charged. Banks charged overdraft fees without ever telling you they were doing it. These things got so bad, Congress took action. Consumer ignorance was built into the profit model of big financial institutions. Educating consumers was not just a waste of money to them, it was actually costing them business.
Credit unions are not-for-profits that want to make their communities a better place. Part of that mission includes financial education. If you need advice about homebuying, creating a budget, or using credit responsibly, your credit union will be happy to help.
Credit unions work for their members. They pay back the money they make to their members in the form of dividends. Since their members are also the people paying for their services, they don’t have much of an incentive to charge an arm and a leg in interest and fees.
Credit unions also offer competitive rates on savings accounts and CDs. Because they don’t have to siphon off money to pay shareholders, they can return that money to their investors: the people who do their banking with the credit union. Compare the earned interest on a credit union checking or savings account to those offered by a for-profit bank. Then, go open an account at TruMark Financial. You’ll thank yourself later.