The benefits of a credit union are many. So, it just may be time for you to make the switch.
Let's dive into the significant advantages of credit union membership and why you may want to take the plunge yourself.
What Is a Credit Union?
A credit union is a membership-based financial institution. It provides banking products and services to its members. Most credit unions are founded based on interests or values — like serving educators or living in a specific geographic zone — that are shared by their members.
Credit unions are not-for-profit cooperatives. This means that instead of paying out profits to shareholders like banks do, they reinvest any profits into providing better offerings to their members. (We'll come back to this soon!)
Are Credit Unions Better Than Banks?
Well, that's a judgment call you'll need to make for yourself. But, chew on these stats:
- Over 134 million people belong to a credit union.
- Reportedly, over 80% of members are satisfied with their credit union.
- People trust their credit unions. (Trustworthiness draws members in and fuels satisfaction levels.)
These are meaningful testaments to the benefits of joining a credit union.
Banks vs Credit Unions — How & What They Each Do
You may find it helpful, though, to understand some of the key distinctions in attitude, approach, and offerings. When you're evaluating credit unions versus banks, look for the differences in mentality, processes and procedures, and product and service availability.
- Attitude. Credit unions tend to be far more grounded in social and community bonds than purely monetary gain. Because this mindset is central to the institution, everything at the credit union — from products to policies to personnel — will have a more humanistic skew. Banks generally optimize their offerings to maximize returns for shareholders, even if doing so isn't ideal for its customers.
- Approach. Because credit unions are people-oriented, and usually relatively small and local, they're often eager to help their members. It's common for credit unions to customize product and service terms, for example. They look at you as an individual rather than one of the anonymous masses. A traditional bank, however, will likely be larger and more corporate. The effect is that it may be more rigid in its processes and rules. Regular banks are less apt to work with you to adjust rates, fees, payment schedules, etc.
- Offerings. Your neighborhood credit union will probably provide fewer products and services than a regional or national bank. Credit unions often tailor their portfolio of accounts, loans, programs, resources, and so on to the needs of their members — so they’re truly bringing peak value to those members. Banks, on the other hand, are able to offer a much broader selection of products and services to address the needs of bigger and more diverse pools of customers.
A Word on Access
Banks and credit unions also usually differ in terms of scale. Most credit unions have only a handful of branches. Meanwhile, many bank chains seem to have an office on every street corner (or an ATM in every shop or transit center).
For people who want or need to do in-person banking, this could be a huge factor to consider.
But, just because credit unions are smaller or have audiences in smaller radiuses doesn't necessarily mean they're less convenient or easy to use. Most have modern banking tools — mobile, online, and telebanking options — just like conventional banks. This makes managing your money from anywhere at anytime simple and fast. For example, Valley Credit Union has over 5,400 shared branches and 30,000 free ATMs as part of the CO-OP network!
What Are the Benefits of Joining a Credit Union?
Your interest is probably piqued right now. But maybe you’re still pondering, “Why join a credit union? What’s in it for me?”
There's a wealth of credit union perks you should know about — enough to fill a whole bank vault! Here are just some of the more notable benefits of a credit union as compared to a mainstream bank.
Better Rates on Savings Accounts
Credit unions typically offer higher interest rates on savings accounts. This leads to greater rates of return on savings.
Dividends to Members
Some credit unions directly share earnings with their members. They give back by issuing dividends to account holders.
Fewer & Lower Fees
Contrary to banks, credit unions are known for having minimal fees. Where a retail bank might assess a charge for something — a loan application, a service, etc. — credit unions might not. And fees tend to be smaller and may be waived in some cases.
More Flexible Lending Options
Credit unions often provide more favorable or lenient loan options for borrowers. For instance, lower interest rates and more agreeable repayment terms are common. It may also be easier to get approved for a loan from a credit union.
Better Customer Care
Member-focused service sets credit unions apart. Credit unions are member-owned and operated, so they do business with the best interests of their members in mind. This means personalized attention that traditional banks aren’t equipped or incentivized to offer.
Community Partnership
Credit unions have a vested interest in the welfare of their employees, members, their families, and the places in which they live and work. Products, services, and engagement initiatives of credit unions usually reflect this connectedness.
Miscellaneous & Bonuses
Many credit unions offer exclusive deals and discounts to their members — like reduced rates on complementary products (e.g., insurance policies). You may also have access to financial education and tools, planning resources, and more.
Your Frequently Asked Questions
You may also be wondering....
Are credit unions safe and secure?
Yes. They're regulated and insured by the National Credit Union Administration (NCUA), a federal government agency that's similar to the FDIC (which insures banks).
Are there any fees associated with joining or being a credit union member?
Some credit unions may require a one-time membership fee to join. And there will likely be fees associated with some products and services — like loan application fees. However, the fees are usually low (lower than banks) and may be waived under certain circumstances.
Is there a minimum deposit required to join a credit union?
Part of the process of joining a credit union may be to open your first account. Some credit unions stipulate a minimum initial deposit to open your account. It's often a token amount, like $5.
What types of products and services do credit unions offer?
Credit unions offer a range of products and services, including:
- Savings and checking accounts
- Auto, home, and personal loans and refinancing
- Credit cards
- CDs and IRAs
- Financial planning and education
- Money management tools and apps
So, Are the Benefits of Credit Union Membership Worth It?
For many people, the answer is “Yes.” Is it for you, too? You’ll have to determine this based on your situation.
We recommend that you:
- Take stock of your personal needs and preferences.
- Research the offerings available at the credit unions and banks you’re considering.
- Assess if and how well the financial institutions on your shortlist meet your requirements.
- Pick the banking providers (Yep, you may decide you need more than one!) that are the best fit.
Valley Credit Union Benefits — Get Them Today!
Credit unions are a great choice for anyone seeking an alternative to traditional banks. There are so many upsides!
And at VCU, there’s no shortage of benefits. Plus, we make it so quick and easy to join. You could be enjoying all the perks of a credit union in as little as a few minutes. Qualified individuals simply need to submit an application and then open an account.
We look forward to welcoming you to the Valley community!
About the Author
Pat Force, President and CEO
Pat Force has been President and CEO of Valley Credit Union since 2016. He has worked in banking for over 30 years and has an MBA. Pat is passionate about credit unions and their “people helping people” philosophy. He enjoys collaborating with others to arrive at a result that works for the common good. Away from the office, Pat likes to spend time with family, travel, read and go for a nice, long hike.