There are many financial products that credit unions offer to help people in maximizing their income and increasing their savings. These are given at a lower or fewer fees compared with traditional banks. Nevertheless, they have some notable disadvantages that can make them unappealing to banking customers. Here are some pros and cons of credit unions to begin with.
List of Pros of Credit Unions
1. Higher Interest Rates
In comparison to traditional banks, you can actually get more for your money when you settle for credit unions. This is because they pay higher interest rates in all accounts to be deposited, including checking accounts, savings, and money market. In fact, this can range from 4-10 times the rate given by local commercial banks.
2. Lower Rates on Loans and Credit Cards
The financial products offered by banks can also be used offered by credit unions. However, the rates are much cheaper. Many people use local credit unions when purchasing cars because of the lower rates compared to dealership financing.
3. Fees Are Lower
If you are going to compare banks from credit unions, there is a huge difference when it comes to fees. This is because many of the transactions offered by credit unions are free of certain charges, including checks, electronic transactions, and withdrawals. Checking accounts are mostly offered with no maintaining minimum balance and without servicing charges on a monthly basis.
4. Offers Better Service
Due to the fact that credit unions have smaller branches compared with most banks, they can offer personal and fast service to the customers. Most of the time, they even assign a person to work with your transactions to gain better service.
List of Cons of Credit Unions
1. You May Have Fewer Options
In comparison to bigger national banks, credit unions can offer lesser financial products. So, if this will be your choice, you won’t have much freedom. If you go with a larger bank, you will have the financial products that should suit your needs.
2. Fewer Locations to Serve You
Due to the services of credit unions offered in a smaller scale, it will be so inconvenient for customers. Aside from having limited number of branches, most credit unions have fewer business hours compared to other banks, not to mention fewer ATMs.
3. Online Services are Poor
In terms of keeping up, credit unions don’t usually offer the latest banking technology. This is because banking has been mostly offering online services compared to credit unions with lesser offerings. So, when you opt for banks, you can have an advantage by viewing your current balance, apply for loans and credit cards, and transfer funds or even pay bills. This has been made possible in one easy-to-use interface that can be done online.
Although credit unions should offer basic accounts that are free or with low fee options. More so, many credit union users would love the personalized services offered as they can save more money from lower fees. However, these may not work for those who want specialized financial products as well as advanced online services. The pros and cons should help you determine which of these services must suit you best.
Natalie Regoli, Esq. is the author of this post and the editor-in-chief of our blog. She received her B.A. in Economics from the University of Washington and her Masters in Law from The University of Texas School of Law. In addition to being a seasoned writer, Natalie has almost two decades of experience as a lawyer and banker. If you would like to reach out to contact Natalie, then go here to send her a message.