Since the uncertain regulations and increasing fees that you can expect from banks, more and more people are choosing the credit unions instead. Therefore, if you wish to decide between a credit union and bank, you should understand which one is best for your specific financial goals.
Of course, both financial institutions feature similar laws when it comes to safety, mortgages, and regulations. However, the main difference lies in the customer experience, which is profoundly different.
In general, it can be confusing to determine the differences between these two financial institutions. That is the main reason why you should stay with us to learn more about it.
Before reading further, you should click here to understand how to manage your money better.
Differences between Banks and Credit Unions
We have to start by saying that banks are institutions that are operating for profit, while credit unions are non-profit organizations. This particular distinction creates an understanding of what you can expect from both places.
Therefore, credit unions feature lower fees and better customer service than banks. However, they tend to have higher interest rates, which is something you should remember. In contrast, banks tend to feature higher fees and lower interest rates.
Banks have higher fees, but you will be able to enjoy convenience due to technological efficiency, a broad array of locations, rewards programs, and mobile access.
Even though large banks feature numerous convenience characteristics, customer service tends to be much better with credit unions. The main reason for that is due to their non-profit status.
The main problem lies in the idea that credit unions do not feature a monopoly on premium customer services. For instance, you can find smaller community banks that will provide you perfect customer service, which will be more efficient than any other financial institution.
Therefore, in general, both credit unions and banks will provide you the same financial services, such as abilities to create savings accounts, business accounts, and to take loans. However, you will get similar products, services, and discrepancies from both institutions.
Check out this site: https://en.wikipedia.org/wiki/History_of_credit_unions to learn more about history of credit unions in general.
Advantages and Disadvantages of Credit Unions
We have mentioned above that the credit unions are non-profit organizations, which means that customers own them. The idea is that you have to qualify for membership so that you can take the products that the union can offer to you.
Sometimes being employed in some company will provide you access to credit unions. Or you can be part of particular schools, churches, communities, or being in some school that will affect your ability to become a member.
If you are not a member of a particular group, you will not be able to become a full-time member, and that is a fact you need to remember.
They operate by member ownership, which is a criterion of joining them in the first place. Generally, they feature better customer service than other financial institutions due to their non-profit nature as well as tax exemptions that will affect you.
Since they are membership-owned, each customer will have to act as an investor as well. It means that you will get both attentive and personal customer service, which can bring you overall satisfaction and convenience.
The main problem is that they are slow in adopting the new technologies similarly as banks, which would affect the overall user-friendliness.
Advantages and Disadvantages of Banks
When it comes to large banks, you should know that they tend to feature lower customer service than credit unions. On the other hand, that will not have to be a fact, because some community banks feature perfect customer service based on testimonials.
However, large corporate banks seem robotic or cold, and that is due to the impersonal training of their employees. Remember that fees are higher than credit unions. Still, you do not have to become a member to get any product or service you require.
Generally, banks feature easier access, more branches, as well as up-to-date technological development such as the implementation of apps and mobile banking. This is highly important because some users tend to depend on mobile banking services.
Which Is Better For Investing?
Remember that credit unions will have the potential to provide you with a better deal because they do not depend on outside investors. Another reason why banks are problematic is that they want to increase profit without thinking about customer service in general.
However, since credit unions feature a customer-driven approach, you will be able to get better loan deals, free checking accounts that come with membership. At the same time, the interest rates are higher on savings.
We should not neglect banks that come with numerous reward programs, which is the main reason why customers choose them, among other things.
For instance, Bank of America has reward programs that will award each sign-up for affiliate bonuses, which is not something you will get with the credit union.