New Year, New Account: 4 Reasons to Choose a Credit Union

Whether it’s the sky-high fees for checking accounts or too-tight standards for loans, many people have become disenchanted with their banks. Fortunately, they’re not the only option. If you’re unsatisfied with your bank, you can take your business elsewhere.

That “elsewhere could be a credit union. Over 96 million Americans currently use one for various economic and service-related reasons. Here are a few reasons you might want to do the same.

1.     Great Interest Rates

Credit unions generally outperform banks in terms of interest rates. Here are a few highlights from the National Credit Union Administration’s (NCUA)latest report:

        Credit unions, on average, have nearly (and in some cases more than) double the interest rates of banks on all types of CDs  (Share Certificates).

        Credit unions’ interest rates on checking, money market and savings accounts are more than double those offered by banks

        Credit card interest rates are slightly lower at credit unions (10.99%) vs. banks (11.82%)

        Both new and used car loan rates are significantly lower at credit unions, and credit unions often provide discounts for members

        Home equity loans carry lower rates at credit unions

Rates vary from institution to institution, so contact your local credit union if you’re looking for specifics. But know that, in almost every case, you’ll save money by using a credit union. 

2.     A Commitment to Financial Education

Credit unions operate on a not-for-profit basis. That is, unlike banks, which have an incentive to sell as many services as possible, credit unions typically offer more objective advice. Take advantage of this by finding a credit union that offers financial education services, including valuable credit card tips and seminars on other financial topics.

3.     More Flexible Loans

Due to default risks and other economic realities, banks often shun those who are in a tight financial spot, even temporarily. Thus, if you’re still trying to build credit, or you’ve made a few mistakes, you might be out of luck when applying for bank loans. However, since they’re typically focused on helping others instead of on profits, credit unions often have more flexible loan standards.

4.     Personalized Service

Credit unions consistently outperform banks in customer service. According to the latest American Customer Satisfaction Index (ACSI), credit unions received an 85 out of 100. The biggest banks scored from 69 to 76, depending on the specific institution, while all other banks scored an 83.

Final Word

With better interest rates, better service and better loan policies, there’s no reason not to join a credit union – especially not eligibility. While credit unions once typically served employees of a specific business, many of their membership requirements are now more inclusive. You can often join because you live and/or work within a city or neighborhood. In addition, once you’ve joined, your family members tend to also be eligible for membership. So if you’ve resolved to save more in 2014, there’s no better way to start than by joining your local credit union.

Alice Holbrook, NerdWallet


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