It really wasn’t until I started this website that I more fully understood what a credit union is and how it is different from a bank. On the surface they seem almost the same. They offer checking and savings accounts, ATM cards, credit cards, all the other basic things you would expect.
The main difference is that a credit union is owned by it’s members – the people who have accounts at the credit union. A bank is owned by investors. These people expect to earn money in dividends from the bank. Since a credit union does not have to pay dividends to investors it offers its services for lower fees and also offers higher interest rates when you have a checking or savings account with them.
Another benefit of a credit union is that when you take out a loan, the interest rates you pay are normally lower than those at a bank. This is one of the main reasons my parents have been credit union members for so many years. They have purchased two homes and two cars through a credit union because the interest rates were so much lower than those at a bank.
Usually credit unions are in a small local area and are not nationwide. This could be seen as a drawback. Many banks are nationwide which means that finding a branch or an ATM machine will be easy even if you are traveling. Fortunately, credit unions have found a way to work together to make traveling easy for their members. You can access your credit union account from almost anywhere in the U.S. and even in some foreign countries. Most credit unions are ‘shared service centers’ which means you can go into any credit union and have access to your account. You can do things such as:
Make deposits and withdrawals
Make loan payments
Make transfer between accounts
Get a cash advance or check your balance
If you want to take advantage of this service you must know the name of your credit union (duh!), your account number, and have a picture I.D. with you. And yes, I realize that most of you would know that but some of us need reminders…
Now that you can do just about everything online, including paying bills, transferring money, checking on your account balances and such, I don’t really see the need for most people to go into a branch in the first place. But that’s me. My mom says that she still likes to go into a branch especially when she has a question or wants to do something like apply for a loan or open a new account.
I recently opened an account at 121 Financial Credit Union. You can read about that experience HERE. I highly recommend checking out a credit union near you if you are planning to open an account or move your existing accounts.
Starting an account at a credit union means that you will pay less in fees, earn more interest from your accounts, and pay less interest if you get a loan. Three very good reasons to go with a credit union instead of a bank.
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