Credit unions are one of the most interesting alternatives to banking, and they offer several advantages over their better-known counterparts. Essentially, a credit union is a private non-profit organization in which members pool their money to provide loans, operate deposit accounts, and fund projects that are in the best interests of its members. Let’s go over a few of the ways in which switching to a credit union can save you money.
It’s kind of odd that more people don’t take advantage of credit unions. After all, their fees tend to be much lower than those of the average commercial bank. When it comes to using ATMs, overdraft or account fees, credit unions tend to have much lower costs for the user.
Unlike most other types of unions, credit unions do not generally charge dues. You will generally pay a one-time membership fee when joining one of these organizations, and sometimes the services are completely free. Whether it’s a home loan, a car loan, or any other sort of credit product, it is likely that a credit union will most likely offer you more generous rates.
These rate benefits also go in the other direction. When it comes to savings accounts, credit unions tend to give a much better return than most bank accounts. These accounts are insured just like a bank account so that you won’t lose any protection.
Savings On Interest Rates
Because it is a “members only” situation, credit unions don’t have to vet every transaction nearly as much because they already vetted you at the point of admission. Credit unions generally have a lot more trust for their customers, so their interest rates tend to be lower. This is mostly because of the business model on which credit unions are based. While others are focused on profit, a credit union only seeks to pay its operating costs. That means less incentive to gouge people on loans for profit.
In some cases, you may even be able to qualify for additional rewards by setting up direct deposit or otherwise making things easier for the company. These rewards and savings can be applied to home loans, car loans, mortgages, credit cards, and probably more. Of course, not all credit unions are so generous. Finding a local credit union can be done with a simple online search.
A Source Of Good Discounts
Credit unions tend to offer discounts and special deals to their members, and these can be a nice little bonus when you switch to a credit union. Depending on which union you choose, you might be able to save money on everything from restaurants to car rentals. Some auto insurance companies will also work out special deals with credit unions so that they can provide their members with lower monthly premiums.
Companies will make these sorts of deals with credit unions because it works out well for them. While they may be selling their goods or services at a lower rate, they also gain a large built-in customer base that will always come to them first. In the long run, that makes up for the cost reductions and makes this kind of thing a good deal for everyone.
Are There Any Downsides?
There are a few drawbacks when you choose a credit union. Credit unions tend to have fewer physical locations, so that can make certain things a little bit harder. They also may not offer the same high-tech infrastructure and security offered by a large bank. Still, these issues will vary a lot from one union to another.
Credit unions might be described as small financial communities, and all communities have certain benefits to their members. If you are wondering how these credit unions are able to offer such good terms to their members, most of it comes from the fact that credit unions are tax-exempt. Since they don’t have to worry about taxes, their operating costs are much lower, allowing them to pass on that savings to their members. We hope that this article has been helpful, and that you will come back to read our work again.
Becca is a java junkie from the West Coast. She enjoys dancing with her husband and has a knack for finding the next big indie boardgame. You can always find her sitting in her tub eating and trying to find the best credit union in Omaha.