| Credit Unions and banks share many of the same services. You can open saving accounts, checking accounts, get loans and do pretty much all the same things with both of them. So if they both offer all the same things, why does it matter which one you choose? While both credit unions and banks offer the same services, that does not necessarily mean they are equal. One may be better for you then the other.
So how do you figure out whether or not a Credit Union is it right for you? Well look into the pros and cons of both credit unions and banks and see which fits your situation better.
Pros: 1: A credit union is typically a non profit organization, whereas banks are a business like any other. What this means is that credit unions do not worry as much about making a profit as banks do. This translates into lower fees for you and better savings. Because of this, the interest rates and fees will almost always be better with a credit union.
2: Since credit unions are non profit organizations, if they make more money then they need to operate they will often pass that back to their customers, giving you a greater benefit if your credit union is doing well.
3: The dreaded overdraft fee is something we all have dealt with at one point or another. But with credit unions, their overdraft fees are ten to fifteen dollars cheaper than a bank's overdraft fee. This difference is also shared in other fees such as late credit card payments.
Cons:
1: Finding out if a Credit Union is it right for you also requires you to look into the cons as well as the pros, and one of the major cons is that using ATMs can cost a fair bit. Credit unions may have lower payments on other aspects, but they often charge high fees for using an ATM. If you are someone who uses an ATM regularly, then these fees may negate any benefit you get from using a credit union.
2: The requirements to open an account at a bank are typically quite low, in most cases they only require you to be above a certain age. And even then that is often bypassed by having a guardian co-sign with you. Credit unions are often far more strict, having a variety of requirements you must meet in order to join. If you do not meet these requirements, it does not matter if a Credit Union is it right for you, you wont be able to use it.
3: Credit unions are not insured by the FDIC, also known as the Federal Deposit Insurance Corporation. This means that if something happened to your money, you would be out of luck. However some credit unions are insured by the National Credit Union Administration. So if you plan on using a credit union make sure to look into it and check to see if it is insured or not. You do not want to trust your money to someone who does not have insurance. |