Few people trust their bank entirely. A Gallup survey confirms that 74% of the US adults have little or some confidence in their banks. Only 10% of the respondents reported that they have significant confidence in their bank.
Some of this distrust arises due to the profit-making nature of banks. Fundamentally, these institutes tend to make risky investments with your money, and they often charge high fees with low deposit account return rates.
On the other hand, a credit union offers lower fees and enhanced customer service. However, there are numerous misconceptions surrounding credit unions such as people thinking that there are only few credit unions near me. It probably explains why fewer than one-third of Americans avail the services of credit unions. Contrary to this belief, there are, however, plenty of credit unions, 8,000 of them are in the US alone.
Here are five good reasons to go for credit unions:
- Improved customer services
Statistics reveal the importance of excellent customer service. The 2011 American Express Survey highlighted that 7 in 10 people were willing to spend more with organizations that provide excellent customer service. Moreover, 82% of people leave a business due to poor customer services.
Banks mainly focus on profits. In contrast, having an account with a credit union makes you a member of the group. It changes the focus of the credit union to better customer services to satisfy their members. Their motive is to support your financial well-being, so credit unions tend to adopt a more cooperative, responsive and friendlier approach than banks.
- Lower fees on accounts
Fees associated with credit unions are fewer in comparison with banks. There are zero to minimal charges of ATM fees and relative to banks, lower transfer fees. Overdraft policies of credit unions are less costly as compared to banks whereas these tend to be a vital source of income generation for banks.
The lower fees translate into increased savings for the customers. A survey supporting these claims found out that merely 37% of banks facilitate free checking. Another poll, however, confirmed that the majority of 72% of credit unions offer free account checking which adds to further lowering the fees with credit unions.
- Improved interest rates
Credit unions offer higher rates of savings and lower interest rates on loan. The fundamental focus of these is not on making profits. Credit unions only need to manage their operating costs. Hence, they can conveniently offer better interest rates.
When It comes to taking loans, the interest rates can be significantly lower. You may also obtain a discount if you rely on automatic set up of payments. Concerning deposit accounts, interest rates can be higher than local banks, but they aren’t as much as online banks.
- Willing to cooperate
Credit unions are eager to work with customers even if there are obstacles for them in getting loan qualification. The officers will provide personal attention and will help you find a solution for getting a loan. Credit unions can assist you even if you have a poor credit history and are trying to get a mortgage.
These programs give the customers control of their budget or allow them to handle their unexpected expenses. Marco Pantoja, interim director at the University of Missouri Office for Financial Success in Columbia, Missouri adds to this. Pantoja outlines, “The different relationship they have with their members allows them to more intimately work with people who want to borrow… They will be more familiar with your specific situation, having done more personal business with you.”
It might be challenging for you to trust credit unions with your funds. However, it is important to note that the federal government insures all credit unions as it does with all major banks. The government backs all the accounts and which are guaranteed up to $250,000.
It is because of all these factors that the credit unions have been increasingly gaining trust. Stan Hollen, the President of CO-OP Financial Services, indicated that these are steadily outperforming banks. He also pointed out that people were able to save $7.3 billion by availing the services of credit unions.