First, let’s explore what is a credit union?
A credit union is still a financial institution. It works very similarly to any other banking option. It holds your money in a safe, secure location and offers loans, savings accounts, checking accounts, balance transfers, and many other options we tend to think of when looking for a financial institution. Most credit unions even offer modern banking conveniences such as online banking, a mobile app, and autopay. So what’s the difference between a credit union vs bank?
What makes a credit union different?
A credit union is a non-for-profit financial institution, whereas banks are for-profit. In short, a credit union is owned by its members. Banks, however, report to and work for shareholders. How does that affect you? Any profit that is made by a credit union, after operating expenses are paid, is invested back into the credit union in the form of better rates and improved services. Credit unions, like Money FCU, were also founded on the philosophy of “people over profits”. It’s why you usually see higher customer service ratings for credit unions over banks. An institution working for the best interest of the members is more interested in the members’ needs versus how much money they make. But, why are you a member and not a customer? Because YOU own the credit union. Your initial deposit makes you a member-owner. Credit unions work for you, not stockholders. You’re a member because you belong to something better.
Is a neighborhood credit union a better way to bank?
Choosing a local, Syracuse credit union helps keep money in the community. For example, the money you put into a savings account at a credit union helps someone else in your community get a car loan. When someone pays back their car loan, the credit union uses that money to pay interest on savings accounts. It’s the original credit union mantra of “people helping people”. It’s a two-way street of savers helping borrowers and borrowers helping savers.
Does my savings earn interest at a credit union?
Absolutely! When comparing financial institutions, credit unions often have higher interest rates on savings accounts and lower rates on loans. Before making any financial decisions, you should always check interest rates. As a non-for-profit organization, credit unions don’t pay state or federal taxes. This helps them pass along those savings to their members.
Locations and accessibility.
Banks used to have more locations, which made banking more accessible for their customers. Nowadays, technology makes most services convenient for everyone, no matter where you are. Options such as online banking, mobile apps, auto-pay, ATMs, and even check deposits with your phone means you can bank whenever and wherever. Brick and mortar is no longer a necessity, but if you are concerned about having a branch near you, some credit unions offer shared branches. This is a network of credit unions across the United States that work together so you can access your account at thousands of locations across the country. Money FCU is part of this collaborative network.
Is my money as safe in a credit union as it is in a bank?
Yes, both credit unions and banks are insured by federal government-backed insurance. NCUSIF protects your funds in a credit union. It’s the equivalent of the FDIC, which is what banks are backed by. The National Credit Union Share Insurance Fund was created by Congress in 1970 as government-backed insurance and means your money is just as safe at a credit union as it is at a bank. As with all banking services, security is first and foremost. Keeping your funds safe and secure is always a top priority at Money FCU.
Where credit unions shine is their loan rates.
Due to being member-owned and without investors to please, a credit union can offer lower loan rates, have significantly lower fees, and offer higher interest rates on savings. In Dec 2019, the interest rate on a 4-year Certificate at 10K was an average of 1.88% at an FCU and only 1.40% on average with a bank. A 36-month used car loan had a rate of 3.47% on average with an FCU and 5.51% on average with a bank. The National Credit Union Administration provides interest rate comparisons from S&P Global Market Intelligence, a division of S&P Global. Credit unions can often offer lower interest rates on loans such as auto loans, student loans, personal loans, and mortgages. Money FCU also doesn’t charge any maintenance fees for checking accounts or require minimum balances. It’s all part of the benefits that members enjoy by working with a neighborhood credit union.
Smaller, in this case, means better.
As we spoke about earlier, as a smaller, local organization, we strive for outstanding service. Being a smaller institution means our members are names, not numbers. We like to build relationships with our members. When we actually know you, it makes it easier to help you and work together towards reaching your financial goals. You know our names and we know yours. In today’s fast and seemingly unfriendly world, a kind and genuine “hello” goes a long way to make a better and brighter day. But more importantly, when you ask us a question, it’s heard. We care about our members personally. If you need to know something, it’s our job to get you the answers you’re looking for.
Don’t credit unions have member qualifications or restricted memberships by invite-only?
Years ago, joining a credit union was a little more complicated than it is today. You usually had to work for a certain company or have a job in a specific field, like the postal service or school district. Today, many credit unions have county or state charters which makes it easier to find one you can join. In many cases, you only have to live or work in a certain geographical area to qualify for credit union membership. Stop in or give us a call here at Money FCU to see if you can join our credit union family!
Does my credit score affect my banking options?
Not at all. Your personal credit does not affect what bank or credit union you can choose. However, a smaller, community-oriented business may be more willing to work with you when you have poor credit and need to get a loan. Credit unions typically look at the whole picture, not just the credit score. We’re in the business to help you, not take advantage of your situation. Money FCU even offers financial coaching to get you back on track. Whether you need to make a budget or do a major credit cleanup, we’re here for you.
So which one is better, banks or credit unions?
We certainly hope you came up with the same answer we did! If working with a financial institution that puts people over profits sounds good, then a central New York credit union is the right choice for you. Contact a team member at Money FCU to discuss membership today!