Credit unionscertainly have a lot to offer that traditional banks can’t compete with, but that’s not to say they don’t have any drawbacks either.
Credit unions aren’t for everyone. Before you choose a credit union over a bank, first consider both the advantages and disadvantages of credit unions. Your individual financial needs will help you determine if a credit union is the right choice for you.
Related:10 of the Best Credit Unions Anyone Can Join
Advantages of Credit Unions
- You’re More Than a Customer.As a member of a credit union, you are not only a customer, but part-owner of the organization. Aside from receiving better service, you possess voting rights, have a say in the operation of the credit union and receive dividends.
- Interest Rates Beat Banks.Speaking of dividends, you’ll earn a pretty penny on deposits compared with a bank. Credit unions are not-for-profit organizations and share surplus funds in the form of higher interest rates on deposit accounts. According to the Credit Union National Association’snational rate index, the average interest rate on a one year CD at a credit union is .44% APY, compared with .30% APY at a bank.
- Community Comes First.Credit unions are owned and run by members of a common community or workplace. For example, membership at ateacher’s credit unionis limited to professionals in the educational field. Services provided by a credit union are meant to benefit the local community and depositors living there.
