Why Credit Unions Are Better Than Banks
NEW YORK (BankingMyWay) – Credit unions and big banks have fought aggressively over consumers for years, but the economic collapse of 2008 and resulting “Great Recession” really clarified what each class of institution brought to the table.
- Big banks touted their vast network of branches and ATM machines, along with a decided edge in mobile and online banking options.
- Credit unions pointed to lower fees and fewer penalties, and a higher priority on customer service, in courting customers.
Now that the economy is brightening, albeit slowly, consumers may want to take a closer look at the options and figure out whether “big” or “small” works for them.
We’ll take a look at the benefits of credit unions and big banks in the week ahead.
First up are credit unions, which seek to leverage widespread consumer frustration over the role big banks played in the ’08 economic tsunami and how those banks were first in line for taxpayer bailouts in the aftermath.
Credit unions are looking to capitalize on consumer frustration with larger banks, especially by touting five key differences between two banking sectors, according to the National Association of Federal Credit Unions:
You’re an owner: The association points out that, at a credit union, you’re not just a customer – you’re an owner. “Members come first, not profits,” the organization says. “Instead, credit unions return any ‘profits’ to members in the form of lower fees and better rates.”
Signing on is a cinch: The association says there are more credit unions in your neck of the woods than you might think (it advises checking Credit Union Locator to get started). The group says that credit unions are making a concerted effort to make the sign-up process easier for consumers and that it now takes a “few minutes “ to open an account at an office or online.
Low balances, low fees: The average monthly fee for opening an account at a big bank is $5.48 – way lower than the numbers cited for larger banks, which clock in at $408.76, according to MoneyRates.com. The NAFCU says many credit union don’t charge the fee at all.
A better deal on interest rates: Credit unions also offer lower interest rates on credit cards. “Recent figures show that average rates for credit union classic credit cards are 11.68%, as compared with 13.28% at banks,” the NAFCU says. (Consumers can compare bank versus credit union interest rates at CULookup.com.
The “convenience” factor: These days, many U.S. credit unions belong to “shared branch networks” that allows wider ATM access across the country, including at brand-name convenience stores such as 7-Eleven.
The message credit unions send to customers? In a word or so, nimbler is better. But that’s assuming “nimbler” is what banking customers want.
Next week, we look at banks, especially big banks, and see if consumers can get a better deal there than at credit unions.
—For more ways to save, spend, invest and borrow, visit MainStreet.com.