Many people have become unhappy with banks. With rising fees, many people have opted out to credit unions. According to statistics from the Credit Union National Association, or CUNA, these not-for-profit institutions have gained 1.3 million new members last year, reaching a high record of total members. So whether you are looking to take out a loan for a car, or looking to open a new account, you need to know all of the options that are available to you. Maybe you can’t decide if you should go to a credit union or a big bank. I’ve been doing my research and found that there are many pros and cons to both options, so ultimately the choice is up to you to decide what will be the best option for your situation.
The main difference between banks and credit unions is ownership. Credit unions are nonprofit organizations owned by their customers, who are called ‘members.’ With this membership you have to meet certain requirements to be a part of a credit union; this may vary from place to place. The National Credit Union Administration (NCUA) manages a database of credit unions. Here you can search for a credit union near you and also find out if you meet the requirements. Since credit unions are nonprofits, they can offer higher interest rates on savings accounts and CDs, and lower interest rates on loan products and credit cards. A big bank is owned by its stockholders. So although you may have an account at one you don’t have any say in the decisions that are being made.
According to a 2010 Bankrate.com study, the benefits of banking with a credit union include:
- Free Checking
- Lower overdraft fees
- Lower ATM fees
- Interest rates capped at 18 percent
- Better service
- Lower loan and credit card ratesLarge banks offer:
- More ATMs
- Longer service hours
- Online and mobile banking
- 24-hour call centers
This is just a brief overview of the differences between credit unions and big banks. Before you make any decisions, be sure to do your own research!