The Advantages of a Credit Union over a Mainstream Banking Institution

Along with researching various checking and savings accounts, it is also important to consider the differences between traditional banks and credit unions to determine which is the best option for you.  With credit unions, you have access to the same vehicles such as checking and savings accounts, loans, CDs and credit cards.  One of the main differences between the two is that credit unions are not-for-profit institutions.  Along with disadvantages, there are some advantages of a credit union compared to traditional banks. 

Credit unions may not have all of the fees that traditional banks charge. Some traditional banks have started charging a fee if you make more than a certain number of electronic transactions per month, which most credit unions do not. Many credit unions offer checking accounts with no minimum balance and without a monthly service fee. With some checking accounts at traditional banks, you are charged a monthly fee if your balance falls below a minimum amount. In many cases, overdraft fees charged by credit unions are lower than other banks. 

Credit unions typically pay higher interest rates on savings accounts, checking accounts and money market accounts that can be 4 to 10 times more than other banks. Using the power of compound interest, your money can grow faster with the higher interest rates. 

Interest rates on personal loans, credit cards and mortgages offered by a credit union are typically much lower than other institutions. It may not seem like a big deal, but over a period of time the difference in interest rates can make a big difference and save you a considerable amount of money, especially on larger purchases such as a home or vehicle. 

Since you a member of the credit union and it may have fewer customers than a traditional bank, you will probably feel like you get more personal service at a credit union. It may be easier to form a bond with loan officers and the tellers. 

In the past many credit unions were only open to members of certain professions, but now most are open to anyone. It may be worth the time and effort of researching a credit union to see how much money it could save you. Many of the fees are lower and interest  rates paid are higher since credit unions are not trying to make a profit.  

There are a number of advantages of using a credit union over a traditional bank for your financial activities.