Some people find themselves at a crossroad on whether to choose a credit union or a bank when looking for a loan. The truth is that credit unions have several benefits over banks. This has made many people prefer credit unions than banks. Most of the banks are established institutions that have been doing business for many years and therefore fluctuating market conditions do not threaten them. Credit unions are capitalizing on this by providing incentives to attract customers and also customize their services to meet unique customer needs. If you have been pondering on what to choose between a credit union and bank, the benefits below will make you go for a credit union.
Significant benefits of credit union
Customers are members or stakeholders
This is the greatest benefit of a credit union like the federal credit union because customers are owners of the union and therefore they make decisions that benefit them all. With banks, the management usually aims at making decisions that benefit shareholders only without considering the impact on customers. When you join a credit union, you become a stakeholder, owner or member and customer at the same time.
It is a non-profit institution
A credit union is a non-profit organization hence all profits made are shared among its members or customers. It is important to note that being non-profit does not mean the union makes no profit; it means that it does not have to work under pressure and use all means possible, including exploiting money from customers, so as to earn profits. Also, the union is exempted from federal tax thus saves this expense to increase its revenue.
Lower interest rates and higher saving rates
A credit union offers lower interest rates on loan accounts and greater rates on savings accounts. This is exactly what every customer wants. Thus with a credit union, you will pay less when borrowing and get more returns when saving than when doing this with a bank. The union is also insured just like banks.
It is friendlier and more accessible
Credit unions are created to serve local people. These unions usually adopt an open door policy making it easier for anyone to access their services and seek personal support. The unions are very connected to the local residents and managers always use a friendly tone in a welcoming atmosphere that make customers feel appreciated. The unions also focus on educating and enriching the community financially by offering free educational services, seminars or classes.