The increase in fee and regulations in banks has led many consumers to turn into credit unions as a great alternative. When deciding whether to go for the credit union or bank, it is important to consider your needs first.
Banks and credit unions normally operate under laws that are very similar in regards to mortgages, loans and safety. One of the differences between the two is the consumer experience you get from both services.
What is the difference between the banks and credit unions?
While credit unions are created for non-profit, banks are for profit institutions. Credit unions offer better customer services and lower fee but have higher interest rates. On the other hand, banks have a higher fee but lower interest rate. When it comes to technological efficiency, convenience mobile access, location and rewarding programmes, banks have the upper hand.
Despite the convenience that large banks has to offer, credit unions are better when it comes to the customer service mainly because of the non profit part of the process. Credit unions, however, do not have monopoly on customer service.
In the end, both the banks and credit unions provide very similar services like the savings and checking accounts. The bottom line is, despite everything the services you get from credit unions and banks can be very similar.
The pros and cons of banks and credit unions
Credit unions
They are non-profit which means that they are owned by a customer. You must qualify for membership if you want to qualify for a loan from the credit unions. Most companies provide access to the credit unions. You can also get them from school, church, employee groups and the communities.
They simply work by membership ownership. The criteria include joining a community, getting a credit union from your employer and also checking the geographical location for a credit union. The customers in credit unions act as investors and this can have its advantages.
Generally, credit unions are slow when it comes to new applications and technology. This means that the experience is not that user friendly and more of a challenge when compared to the banks.
Banks
Larger banks may have lower customer service approvals especially due to their impersonal services. Smaller and community banks have great customer service. Even if the services in larger banks are robotic, it is usually consistent due to the training the workers get.
The fees at banks are higher but there is no membership requirement for people who want to get the loans. Banks have more branches, better tech development and easier access when compared to the credit unions.
Which one is best for investing?
Credit unions present the potential to have great deals because they are not manipulated by outside investors who are looking to increase the profit without any concern for the customers. Basically, it has a customer driven approach that translates to better loan deals, higher paid interest, free checking accounts for all members and a high paid interest rate. But banks on the other hand have better reward programs and cash back deals. The better deal will depend on your financial situation in this case.