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The difference between using a credit union vs a bank is shocking and would benefit almost anyone. If you were like me, I experienced high bank fees, expensive checking account fees, high-interest rates on credits card until I found out about a secret society called the credit union (not really a secret society). Investopedia states that Credit Unions are created and owned by their members or “ participants”. So when you open an account at a credit union you basically partake in the “ownership” of the credit union. However, before I discuss my reasoning for switching to a credit union in detail I want to make it known that most credit unions have restrictions on who can join. I was able to join a local credit union because I was simply employed there, other than that I would have only been able to join if I was employed by a governmental or non-profit organization that are members of the credit union. However, many credit unions have many provisions that allow you to join if your family member is already a member, such as a sister, brother, mother, uncle, etc. Ask your family members if they are a part of a credit union so that you can see if you can join.
Here are the five benefits I have personally experienced from being a part of a credit union:
- Lower Bank Fees: I have banked with the larger banks such as Bank of America and Wells Fargo, I would get hit with hefty bank fees. At one bank (I won’t call them out) I got hit with overdraft protection fees of $35 with each transaction that hit my account, even though their checking account fees are what made me overdraft (I had no money in the account)! The bank that I am with now charges .50 for overdraft transactions and the checking accounts are free. (Big Upgrade!)
- Not for profit/Member owned: Again credit unions are generally not for profit or “member owned” meaning that as an account holder I am a member/owner of the credit union. This is a great thing because the bank is not publicly traded on the stock market, they are not solely focused on turning a profit for investors, but want to focus on the financial well being of the members.
- Provide financial counseling: My credit union provides FREE financial counseling to make sure that I get my finances going in the right direction. They have my best interest at hand when it comes to my finances and wants me to have all the right resources have a better financial life!
- Better loan terms and rates: My credit union offers some the lowest interest rates for mortgages, car loans, and credit cards. I don’t get hit with exorbitant fees and they usually have the most competitive rates overall vs banks.
- Smaller/Local: Most credit unions are a lot smaller than the for-profit banks. My credit union has strong ties to the community. I even won a scholarship from my local credit union in college! (Heck yeah!) Generally, when your a member of a credit union any awards or competitions are for members only, so that increases the chance that you or your child will win them!
Overall, since I joined a credit union, I never looked back! I have no ties to for-profit or big banks whatsoever when it comes to my money. I think it was one of the best things I could have ever done! Again, check with your employer to see if they are a member of the local credit union. If not, check with your family members, you could be a lot closer to becoming a member of a credit union than you think!