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10 Reasons To Open an Account with a Credit Union

10 Reasons Why You Should Open an Account with a Credit Union

The average credit union offers a wide range of services to its members, including low-cost savings accounts, auto loans, mortgage loans, personal loans, and business loans. In fact, many credit unions can offer better rates than big banks on some of these services. That’s because credit unions are not-for-profit financial institutions that are member-owned and controlled by their members—you have more control over your finances at a credit union than you do at most banks. In addition to these benefits, here are 10 more reasons why you should open an account with a credit union instead of a bank.

Papers of Credit Union on Desk

1) Member-Owned Banking Means Better Rates
While big banks are privately owned, credit unions operate on a not-for-profit basis, which means they return their profits to members.

Since your money is pooled together with other member deposits, you gain access to better rates for loans and higher interest on deposits than you would get from most commercial banks.

As an added bonus, since credit unions are nonprofit organizations, they can offer lower fees on services like ATM use (and no overdraft fees!) than traditional banks.

Plus, your deposits stay put—credit unions can’t sell your funds to other institutions.

And remember: If you own shares in your local credit union or bank (in many cases through payroll deductions), you’re voting every year for its board of directors.

2) An Account Tailored to Your Needs
A credit union is a cooperative financial institution that exists to serve its members.

Membership is open to anyone who lives or works in a particular region, and every member has an equal vote in its operations.

This democratic structure gives credit unions one of their biggest advantages over banks: They’re highly responsive to their customers’ needs.

Because they don’t exist for shareholders, board members aren’t as concerned about profitability as banks are.

That means you can almost always expect better interest rates from a credit union than from your bank—even if you have bad credit or no collateral.

The same goes for loans—you can rely on greater flexibility when it comes to applying for and qualifying for loans at a credit union.

3) Free Checking Accounts
Banks and credit unions compete by differentiating their products.

While both offers checking accounts, for example, banks typically charge $20-$35 per month to maintain one.

Credit unions don’t charge monthly maintenance fees and instead, focus on rewarding long-term customers and giving back to community development projects through their capital reserves.

By not charging monthly maintenance fees, credit unions give members more control over how much they spend on banking services each month – which is good news for people who just want to bank but don’t want to pay an arm and a leg for it.

4) More Flexible Mortgage Options
Unlike banks, credit unions give you more flexibility on mortgage options.

Because they’re not-for-profit organizations, they typically offer loans at lower interest rates, which means you can afford to buy a home that costs more or invests in upgrades that would’ve been out of reach if you were getting financing from one of the big guys.

Credit unions are also great for people who are looking to refinance their mortgages.

And it’s nice knowing your money is going toward furthering your community instead of adding someone else’s wallet.

5) Customer Service Focused on Members
When members have a problem, they’re not going to get bounced around from department to department.

They’ll talk to someone who can actually help them right away. If you’ve ever had a problem with your bank, you know how important that can be.

Plus, because credit unions are nonprofit entities, more of their profits go back into improving customer service for members. How cool is that?

6) No Account Minimum
One of the biggest differences between big banks and credit unions is that, while banks tend to have $500 or $1,000 minimum deposits required to open an account, credit unions often do not.

If you’re just starting out and need as much flexibility as possible, choose a credit union.

They don’t require big cash deposits and can give you more freedom than your bank might.

That said, there are some drawbacks to going with a credit union over a bank: higher fees on debit cards and lower interest rates on savings accounts for starters.

7) Protect Yourself From Identity Theft
In cases of fraud or identity theft, banks are not legally obligated to issue you any money from their insurance funds.

In contrast, if you have a credit union account, your funds are federally insured up to $250,000.

If a bank loses your money or makes a mistake that causes you to overdraw your account, expect some extra fees and no real relief.

That’s why it’s best to stay safe and choose a financial institution that will protect your money in case of an error on their part.

8) Protect Against Bank Errors in Your Favor
Yes, it’s true: If you open an account at your local credit union and deposit money, and then transfer that money to another financial institution—say, a large bank or brokerage firm—you have control over how those funds are transferred.

In other words, if there’s an error in your favor, you won’t have to wait several weeks for your refund to show up.

Credit unions do business differently from big banks. Whereas it can take weeks or even months for a big bank transfer error in favor of a customer to be corrected, every transaction at a credit union will be instantly corrected so long as both accounts are within its member base.

9) Avoid ATM Fees When Traveling Abroad
When you’re traveling abroad, it can be hard to find ATMs that don’t charge fees.

By opening an account at a credit union, you can avoid these fees completely—or at least pay less for them.

Most of your major banks probably won’t have ATMs abroad that are fee-free, but many credit unions do.

Be sure to check beforehand that you’ll be able to find one of their branches while you’re out of town.

If there isn’t one available, ask about its ATM network or use cashback services like Xoom or Revolut which allow international money transfers through banking partners worldwide for free!

10) Have Fun Helping Others!
A major benefit of credit unions is that, unlike big banks, they’re typically more willing to help customers with lower incomes and those who have fallen on hard times.

Credit unions are made up of members—people like you—and as such, they tend to pay closer attention to their membership base as a whole.

That often translates into access to low-cost loans for mortgages and other needs. And since many credit unions accept people from all walks of life, they also tend to offer better customer service than large banks.

Plus, credit unions usually don’t require you to pay high fees and interest rates.

Conclusion
The biggest and most obvious reason to open an account at a credit union is that you feel like you’re not getting enough customer service from your current bank. A lot of banks seem to forget that they exist for their customers.

They’re not just there to make money—they’re there to help people! Credit unions understand that and take pride in treating their members like valued individuals.

Even if you don’t live near one of their branches, many credit unions offer online banking and bill payment options, so check out your options and choose a credit union where you feel welcome and appreciated!

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