chalkboard with pros and cons of banks and credit unions

The Financial Faceoff: Credit Unions vs. Banks

Take a drive around your neighborhood and you’ll almost certainly pass by a credit union or two. These community-focused financial institutions are quickly gaining popularity as people search for alternatives to using a big bank.

Think you’re ready to give a credit union a try? Check out all the advantages of becoming a credit union member in this blog!

What is a Credit Union?

Credit unions are not-for-profit financial institutions that have roots dating as far back as the 1850s. And credit unions are focused on their members’ financial success.

The biggest difference between a credit union and a bank is that credit unions are owned by their members – not outside shareholders. This means that credit unions share their profits with its members, often in the form of lower fees, better savings rates, and lower loan rates. 

Beyond the dollars and cents, credit unions also invest in offering financial literacy programs, courses, and seminars. Credit union members also elect the board of directors for their respective credit unions, so they have a say in ensuring their best financial interests will be met.

 

Why Choose a Credit Union?

A credit union offers most, if not all, of the same services that a traditional bank does, but puts their customers interests at the forefront. This added level of service that you’ll experience is what truly makes the difference for the hundreds of thousands of current credit union members throughout the Tampa Bay area.

Here’s some of the most popular reasons why CU members chose a credit union over a traditional bank.

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More Bang for Your Buck

We already mentioned this credit union advantage, but it’s worth repeating: Credit unions typically offer lower credit card or loan rates and higher deposit account rates than banks. Credit unions also pass savings onto their members in the form of lower fees. These two concepts alone mean more money back in your pocket.

Another cool thing about credit unions is they often offer membership perks, discount programs, and other rewards you may not see at a bank. For example, you might see car rentals, travel deals, or fitness discounts as part of your membership.

Better Customer Service

Credit unions are all about their members, so the people serving you are likely your neighbors who live and work in your area. And, they’ll know you by name as soon as you walk through the door. For example here in Tampa Bay, Achieva Credit Union has an 84.4% customer satisfaction rating.*

Remember, the motives of a credit union are different from a bank’s business model – people first, not profits. Just ask ECU Credit Union.

(*Source: Achieva’s 2019 Annual Report

graphic of bankers with financial symbols

More Flexible and Forgiving

Because credit union staff will take the time to get to know you and your financial needs, credit unions are often more flexible with your credit history, even if your rating is poor. In other words, they are more willing to work with you. 

Credit unions also may make certain fee exceptions or offer forgiveness policies if you’re an existing member in good account standing.

No Surprises

Banks sometimes have hidden fees or sneaky requirements built into their operations. For example, you may have a free checking account at your bank. But to keep it free, you have to make 10 purchases each month or set up 3 direct deposits or else you may face a maintenance fee.

And then there’s overdraft fees. Banks often charge more for these types of fees. In fact, a NerdWallet study uncovered that the average credit union overdraft fee is an estimated $10 less than banks.

More Community-minded

Just like your favorite local restaurant, bakery, or hair salon, credit unions are friendly community staples. In turn, they care about the communities they serve. 

More recently, local credit unions have been stepping up to help local small businesses during the coronavirus pandemic. As examples, MIDFLORIDA Credit Union offered a Paycheck Protection Program, and USF Federal Credit union provided forgiveness resources. Meanwhile, Achieva Credit Union collected food donations for local food banks.

But credit unions are here for the community during the more certain times, too. For instance, Achieva opened a signature “Paw Park” next to its headquarters so neighbors can romp around with their pups. And GTE Financial has raised more than $30,000 for the Boys and Girls Club of Tampa Bay. 

Correcting 5 Credit Union Myths

“It’s too hard to join a credit union.”

Fact: Credit union membership used to be limited to specific memberships. But things have come a long way since. 

The truth is: You can join a credit union based on your employer, family, location or group associations. While you may have to meet certain requirements to be eligible to join, credit unions aren’t VIP clubs. Many credit unions have expanded their membership eligibility requirements so more members of the community can join.

“My money will be hard to access.”

Fact: Credit unions have networks and technologies in place so you can access your money 24/7: shared branch locations, ATMs nationwide, online and mobile banking capabilities are just a few of them.

“Banks offer more services than credit unions.”

Fact: Actually, credit unions have a full suite of products and services like credit cards, online banking, mortgages, personal loans, investment services and so much more. And let’s not forget – credit unions are offering these products at better rates.

“Credit unions aren’t tech savvy.”

Fact: Many credit unions offer mobile and online banking, remote deposits, eStatements, and fraud alert technology, so you can bank the way you want to bank. And you don’t have to walk into a branch to get these types of services.

“Credit unions don’t have to pay taxes.”

Fact: Since credit unions are not-for-profit institutions, they are exempt from federal corporate income taxes. But they still pay property, employer and local taxes.

Who Says You Need a Bank to Bank?

Now that you know a little more about credit unions, you might be wondering how to become a member. Joining a credit union is easy: You can get started by checking out BACU’s coalition of credit unions.

The bottom line: If you haven’t considered joining the local credit union you pass on your way to work or the grocery store, it’s time to start thinking about how it can benefit you and your financial health. After all, who says you need a bank to bank?