The Pros and Cons of Credit Unions

An alternative to a commercial bank is a credit union and there are both advantages and disadvantages of using either of these options. A credit union differs from a commercial bank as it is a not-for-profit financial organization that pays out dividends to its members. On the other hand, banks are institutions that make a profit and they only pay dividends to stockholders. If you are considering joining a credit union, it is important to consider your own financial position and the pros and cons of credit unions before making your decision.

Here are 5 pros of credit unions:

1. You Are a Member

You are not just a customer at a credit union, you are a member. This makes you a part-owner of the credit union and you will receive dividends and voting rights.

2. They Have Lower Fees

Another way that credit unions pass on savings to their members is by giving them lower fees than commercial banks. This means that in most circumstances, it costs less to have an account with a credit union than a traditional back.

3. They Offer Better Rates

If you take out a loan with a credit union, you will get lower rates than you would with a traditional bank. You can also earn more on your deposits as they pass on surplus funds to members by giving them higher interest rates on their accounts.

4. It is About the Community

Members of a common workplace or community run credit unions and the members run this credit community. Credit unions are designed to benefit all members of the community.

5. The Customer Service is Better

Typically, you can expect better customer service from a credit union than from a commercial bank. One reason for this is that they are smaller organizations than most commercial banks. This means that the staff get to know the customers better and are more likely to focus on their needs. Another reason is that credit unions have a greater focus on benefiting everyone in the community and recognize that customer service is an important element of this.

And now here are five cons of credit unions:

1. You Have to Pay Membership

The first disadvantage of becoming a member of a credit union is that you must pay a membership fee to join. However, the membership fee is usually very low with most costing between $5 and $25. Most credit unions also have minimum deposit requirements to open an account with them and these vary from one credit union to the next.

2. They Are Not All Insured

It is important to note that not all credit unions are insured. There are some that are insured by NCUA, but others are not. This is something you might want to check before taking a risk with your money. Federal credit unions are insured by the US government and banks are insured by the FDIC.

3. There Are Limited Branches and ATMs

Many credit unions are location-based. Therefore, they only operate in a small area. This means that they have limited branches where you can go to discuss your needs and make face-to-face financial transactions. Similarly, they only have limited ATMs and you may not have access to your money from ATMs belonging to other banks or organizations.

4. They Offer Fewer Services

Large commercial banks have the money and staffing to offer a wide range of services to their customers. Credit unions have come a long way in improving the services they offer, but they still fall short of the commercial banks. For example, a credit union may not have the capacity to offer you a large commercial loan. If this is a service you require, it is likely you will need to turn to a commercial bank that offers this service.

5. Poor Technology

As banks are organizations that make a profit, they have the money to invest in technology. Credit unions are not-for-profit organizations and do not have profits to put into technological developments. This means that if you are with a credit union, it is unlikely that you will have features such as mobile apps. On the other hand, most commercial banks have websites, online banking apps, and apps that allow you to use a smartphone to pay for goods while out and about.


Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sipho Maseko
10 Things You Didn’t Know About Sipho Maseko
Avi Meir
10 Things You Didn’t Know about Avi Meir
John Donahoe
10 Things You Didn’t Know about John Donahoe
Andrew Lonsberry
10 Things You Didn’t Know About Andrew Lonsberry
Greenlight Debit Card
20 Things You Did Not Know about Greenlight
NFT Market
The Top Five NFT Marketplaces Out Right Now
Activist Investors
What Exactly is Activist Investing?
Apple Products
Five Stocks That Most Billionaire Investors Own
Hiking Tahiti
A Traveler’s Guide to Hiking in Tahiti
NOTaBLE
The 10 Best Restaurants in Calgary, Canada
Hyatt Regency Calgary
The 10 Best Hotels in Calgary, Canada
Montevideo, Uruguay
The 20 Best Places to Live in Latin America
The 10 Best Pontiac Firebird Models of All-Time
Why Did They Stop Making The Pontiac GTO?
What to Look for in a Used Buick Enclave
Best Buick SUV Models
The 10 Best Buick SUV Models of All Time
Hermes Klikti watch 17 x 16 mm
The Five Most Expensive Hermes Watches Money Can Buy
Louis Vuitton Tambour Daimer Cobalt Blue And Gold Chronograph 46
The Five Best Louis Vuitton Watches Money Can Buy
Chopard Alpine Eagle Ladies' Small
The Five Finest Gold Chopard Watches
Chopard
The Used Chopard Watch: A Buyer’s Guide
Anil Ambani
How Anil Ambani’s Net Worth Crumbled to Almost Zero
How Toby Fox Achieved a Net Worth of $3 Million
Pedro Pascal
How Pedro Pascal Achieved a Net Worth of $10 Million
Taraji P. Henson
How Taraji Henson Achieved a Net Worth of $25 Million