One of the most exciting parts of being in your twenties and thirties is all the important decisions that lay ahead of you. Of course, mixed in with all the excitement is the stress of making the best decision. This especially applies to financial decisions, which have the potential to affect the rest of your life.
One of the big decisions you’ll face is which financial institution to use. A lot of them are out there, all vying for your attention and all promoting benefits that seem to blend together after a while into an amorphous blob of numbers.
In the sea of numbers and promotions, credit unions tend to get lost in the shuffle. This is a shame, especially since they have many features that can set twenty- and thirty-somethings off to a fantastic start in their financial life.
Starting a Checking Account
You can start benefiting from a credit union just by opening an account. Credit unions are not for profit organizations, and as such their fees are usually lower than standard bank fees, which can really add up over time. In 2015, for instance, Bankrate’s checking survey revealed that the average overdraft fee was $28.20 at credit unions, versus $33.38 at banks. They also found that credit unions assessed a $0.94 fee for out-of-network ATM usage, compared to the $1.72 fee charged by banks.
This is good news for everyone who banks at a credit union, but people in their 20s and 30s may get the most benefit. After all, if you’ve just graduated from college or are working on a graduate degree, you probably don’t have a lot of money. Why spend more of it paying bank fees when you can spend it on things you actually need?
Getting a Savings Account
One thing you could do with the money you save in fees is deposit it in a savings account. According to data provided by the national interest rate-tracking service DataTrac, a credit union offers an interest rate that is an average of 0.20 to 0.35 percent higher on savings accounts, money market accounts and CDs. Admittedly, a fraction of a percent won’t make you rich, but it can add up over time thanks to compounding interest.
Getting a Credit Card
Once you’ve turned 18, you were probably inundated with preapproved credit card offers. This can either be your first step toward establishing a solid credit history or the worst financial mistake of your life.
Credit unions can steer you toward the former option by offering you a credit card that has a much lower interest rate than credit cards offered by other banks. According to DataTrac, the average interest rate on a credit card is 9.37 percent, as opposed to the 12.24 percent interest rate the average bank has on its credit card.
If you already have a credit card and are wondering how you’re going to pay off the mountain of debt you accumulated, a credit union can also help. Tools like a balance transfer or debt consolidation can make paying down your credit card debt easier.
Taking out a Loan
Getting a loan, like getting a credit card, can be a double-edged sword. If used wisely, though, a loan can help you get an expensive item like a car and help build your credit history at the same time.
Credit unions are known for working with their members to help them get a loan, which can help out twenty- and thirty-somethings who may not have the credit history required to be taken seriously by large banks.
In fact, some credit unions will even approve you for a “signature loan,” an unsecured loan that is only guaranteed by your signature. If you’re trying to build up your credit history, this is an excellent financial tool.
Join a Credit Union Today
If you’re in your 20s or 30s, a credit union can be a tremendous help. Credit unions have a lot of advantages over banks, from lower fees to lower interest rates, as well as the willingness to give you a loan that will fit your lifestyle. Get started with a credit union like First Alliance, and get the tools and information you need to kick-start your adult financial life.