When choosing where to stash your cash, you really only have two options: a bank or a credit union. However, most people don’t seem to actually know what a credit union is or what the differences between banks and credit unions are. Even worse, some people have a complete misunderstanding of the services and benefits a credit union provides. This article discusses the biggest myths around credit unions, and then shatters them! Get ready to have your mind blown, but in a warm and friendly way, because that’s how credit unions do it.
Credit Union Myth #1: “I can’t join a credit union.”
A large portion of the population believes they can’t join a credit union, and that is entirely not true. This misconception originates from the fact that credit unions used to be very limited to only serving common bond groups and organizations, in accordance with the Federal Credit Union Act. However, in the early 1980’s credit unions where able to expand there fields of membership to be community based organizations. For some credit unions that can still mean they are only available to people who work for a certain organization or belong to a certain group. However, more and more credit unions have what is known as a Community Charter. This means the credit union is open to serving anyone within a specific geographic location. There are credit unions that offer community charters that are city based, county based, state based, even national and international charters. Simply put, that means you are eligible to join a credit union, and in some cases possibly more than one. Many credit unions are open to the public, there are many excellent online resources that can help you find a credit union near you. On a side note, don't let the word "join" scare you either, all that means is "open an account," many credit unions even offer options to do that online.
Credit Union Truth #1:
There is a credit union for everyone.
Credit Union Myth #2: “Accessing my money will be hard”
This is another misconception from the earlier days of credit unions, before modern technology. Now just like any bank, credit unions offer a wide array of convenient ways to access your funds and manage your money. You can literally access your money anywhere when you use a credit union. Most credit unions are part of a vast, nation-wide networks of fee free ATMs, like Money Pass. Additionally, with the rise of online and mobile banking options you can view your accounts and manage your money from anywhere in the world anytime. Even deposit checks and check your credit score on your phone! Plus, over 1,800 credit unions participate in what is known as shared branching. This means if you belong to a credit union in Minnesota that is part of the shared branching network, you can still complete transactions on your account at a completely different credit union's branch in Vermont that is also part of the shared branch network. You can’t do that with a bank.
Credit Union Truth #2:
You can access your money from anywhere, anytime with a credit union.
Credit Union Myth #3: “They are too small to help me”
Credit unions get a bad rap about being small, which causes people to worry about the security of their finances and the availability of products and services. But fear not, credit unions offer the same insurance to your funds as a bank does. While a bank federally insures your money through the FDIC, a credit union does the exact same thing but through the NCUA. Both are government organizations that insure your accounts up to $250,000. Even more important, during the financial crisis of 2008 the rate of bank failures, 0.60%, was almost triple that of credit unions, 0.23%; bigger does not mean more secure.
As far as availability of products and services, each financial institution is going to offer a wide variety of financial options, regardless of if they are a credit union or a bank. Some are going to meet your needs other will not, that’s just life. But credit unions keep pace with banks for the latest technologies and security enhancements when it comes to their product and service offerings. Plus, credit unions are known to have fewer and lower fees and better interest rates than what banks will offer, even the small credit unions. That being said, its true there are not any credit unions the size of Wells Fargo or Chase Bank, but according to this survey smaller is better when it comes to customer satisfaction. At the end of the day, where you bank your money is a choice; make sure you understand all your options.
Credit Union Truth #3:
Credit unions are modern financial institutions.
Credit Union Myth #4: “They’re more for those in need”
This perception is in part based on how credit unions got started back in the Great Depression era. During this time credit unions were founded as a trustworthy alternative to banks, which kept failing, causing people to lose their life savings overnight. Credit unions literally rose from the ashes of the banks to help those in need of a better financial institution. Still today, credit unions still offer the same products and services as a bank, but they operate on a different business model and philosophy, one that is actually meant to help the consumer prosper, not stockholders. Credit unions accomplish this by providing fewer and lower fees and better interest rates on loans and deposits than a bank. Due to this, yes credit unions do tend to be more willing to help those in tough financial situations than a bank will. This is because they are more flexible with their lending and deposit guidelines than most banks. Remember banks are looking out for stockholders, not consumers (a.k.a you). Credit unions tend to extend credit based on more than just your credit score; they look at your overall financial situation and your financial goals. Which I would think most people would want regardless of their financial position.
Think about it this way, since credit unions offer higher interest rates on savings accounts, then if you have more money you should be putting it in a credit union, not a bank, because your money will be working harder for you. Plus, many credit unions also offer comprehensive investment services. Additionally, if you have good credit, you will receive a lower interest rate on a loan from a credit union than at banks, saving you money. When it’s time for a car or a mortgage, you should be looking at credit unions. The real question is why would you continue to keep your funds at a financial institution that is going to cost you more in the long run and isn’t looking out for your bottom-line, regardless of your financial status?
Credit Union Truth #4:
Credit unions have better rates and exceptional service.
Credit Union Myths and Truths Recap:
There are over 112 million Americans that use a credit union for their financial needs and that number continues to grow every year. Credit unions are just a different kind of bank, they are owned by you and are working for you to give you control over your finances. The differences between banks and credit unions can actually have a large impact on your finances. It’s important to seriously consider a credit union to help you meet your financial goals; otherwise you are limiting yourself. That being said, just like with anything in life, you need to consider what you need and want from your financial institution. Then compare you’re available options, for the majority of Americans a credit union has exactly what they need and more. Today’s credit unions are modern financial institutions, which provide free and easy access to your money with the latest security and technology. Chances are there is a credit union in your area that you are eligible to join, so you can start receiving better interest rates and start being treated like a human, not an account number. That’s not myth, it’s a fact.