Banks have, over the recent past been marred with scandals after scandals that have caused consumers to look for alternative credit unions. The union have over the period of the last 12 months registered a record high of 1.3 million new members, which is according to statistics from the CUNA (Credit Union National Association).
The National Credit Union Administration puts the number of unions in the country to be more than 7,000 and they exist in different sizes and offer different services. Joining a credit union has its benefits; however, it also has its downsides. You should consider the following pro and cons of five chief benefits of the credit unions before opting to join.
Customers Are Owners
In a company, even the executive management is answerable to someone. In the case of publicly-traded banks, they are under the ownership of money-minded shareholders. As such, decisions made by the management in such companies are often geared towards putting money in the shareholders pockets with little regard to the customer. Shareholders have no qualms when bank place additional fee to increase revenue (which fattens the stock price), yet the bank customers dislike the new fees.
In the case of credit unions, the customers are the owners; therefore, all decisions stand to benefit all parties.
In a non-profit institution, the profits are shared among the owners who are also the customers. This, however, does not mean that the organization does not earn a profit; it would make no business sense. Business need to make money (earn profits) to survive. In short, the organization is not keen on making a profit at the expense of its customers. Furthermore, credit unions have a federal tax exemption that sees the unions plough that save expense back into their business.
Fewer Fees and Higher Savings Rates
Unlike most banks, credit unions offer free accounts that come with a zero-balance requirement, meaning no service fees. Also, the unions have certificates of deposit, checking accounts, and interest rates on savings that may exceed those offered by banks. On the flip side, the interest charged on credit and loans is significantly lower. There are certain credit unions that have regulations that limit them to charging a certain interest rate on credit cats and loan.
More to Gain
In most cases, the membership requirement for many credit unions is that members be local residents. Bear in mind that these institutions still offer the same services as banks do (loans, checking, savings, and investment options). This is something that can’t be said for larger banks who are often only answerable to wealthy shareholders. This has been shown time and time again to cause issues on a larger level and also on a more personal basis. These reviews of Chase are a case and point.
Additionally, for businesses, it allows them to be part of a community – something many cherish.
The running of credit unions is through democracy – owned and run by members. As such, the unions can make decisions that benefit the members as opposed to doing things that please as certain lot of stockholders.