Credit unions offer similar products and services as banks, such as checking accounts, savings accounts, ATMs, and local branches you can visit for assistance. Here, we will compare credit unions vs. banks to help you see the difference and the benefits of working with your local credit union.
How Does a Credit Union Work?
People often mistake credit unions as special financial institutions that require specific membership to certain affiliations, like unions. However, this is not an accurate assumption.
Today, most credit unions have flexible membership terms, like being a resident of the local community, having children enrolled in a specific school district, or working within a specific industry, but without having to join a union. In some cases, you can even become a member of a credit union if you have a close relative who is already a member.
In fact, credit unions are owned and operated by their members. Members are shareholders and customers who can receive many financial benefits such as a portion of the company’s profits (as dividends). Unlike a bank, a credit union is a financial institution that works for you.
Credit Unions vs. Banks
Compared to banks, there are several benefits of joining a credit union in Amarillo, Texas or your local community, as follows:
- Lower Fees – Most credit unions have smaller minimum balance requirements and offer low fee or free deposit account options. Many offer various forms of overdraft protection, with lower fees, compared to banks. Typically, there are no limits on the number of ATM transactions you can perform each month.
- Locally Based – Since credit unions are community-based, their members and boards are people in your local area. They are more in touch with what services members want (and how they interact with the institution/its technologies), and work hard to ensure all members are satisfied.
- Better Rates – Credit unions are not-for-profit cooperative financial institutions and reinvest their profits by giving them to their members. This translates into lower interest rates on loan products and higher dividends on deposit accounts. Additionally, some credit unions will reduce interest rates on loan products when they are set up for direct debit or auto-pay.
- Better Savings – Members of credit unions tend to see higher savings rates, as the average interest rate on accounts is higher than that for banks. Combined with lower fees and excellent customer service, this amounts to an improved experience and better value with your financial institution and your money.
- More Flexibility – Credit union boards are more willing to consider loan applications from their members and even allow members the opportunity to explain unique or extenuating financial circumstances. It may be possible to negotiate lower loan rates and reduced interest rates if they would benefit your financial situation.
- Cooperative Not a Corporation – A credit union is a cooperative consisting of members and a board the members elect. To this end, credit unions tend to follow a democratic method when making changes to policies, adding or removing services, and more. Plus, any member in good standing can seek election to the board.
- Extensive ATM Network – Credit unions work with one another to ensure members avoid paying ATM fees when traveling outside their local communities. At TPFCU, we provide surcharge-free ATMs in our local area and have ATM locators online so you can easily find and access services locally or when you are on the road.
- Rewards Programs – There are various rewards programs available through credit unions for free, unlike some banks that charge annual fees to participate in their rewards programs. Just open an account and the credit union will provide you with information on its program, so you can start benefiting right away.
- Additional Services – From online banking and bill payment to notary services and more, the majority of other services found at credit unions are free for members to use whenever they need them. Your local credit union may offer cash-checking services, auto loans, lines of credit, and tax services. Online services enable you to make transactions and access various financial products without visiting your local branch.
As you can see, credit unions offer similar services to banks, but with several product, service, and technology benefits. It is important to note that the membership requirements, types of benefits offered, and other such aspects can and do vary from one credit union to the next.
Contact TPFCU Today
If you are considering joining a credit union, the best place to start is to see if you are qualified to join. Please feel free to contact The People’s Federal Credit Union at 806-539-8571 to find out more about our membership requirements and learn about the current benefits our members enjoy. Also, say hi to us on social media!
