Ever wondered what the difference is between banking with a credit union and a traditional bank? We did too… and we found that credit unions can actually save you money. Here’s how.
The difference between a bank and a credit union
Sure, they seem similar. You can go to either establishment to deposit money, withdraw money, take out a loan, refinance your home and so on and so forth. But there are some important differences to note. Banks, for example, are typically more convenient. There are Bank of Americas and Chase Banks on almost every corner. Banks are also run for profit, whereas credit unions are non-profit organizations. Since banks and credit unions do essentially the same things, it’s up to you to decide which is best for you (by looking into fees, interest rates, etc. on services you will use). Here, we’re talking specifically about how banking with a credit union can save you money.
How credit unions can save you money
1. Higher rates of return on savings accounts
According to a survey on Bankrate.com, some of the best interest rates on savings accounts are from credit unions. This includes money market accounts and CDs as well.
2. Better rates on credit cards
If you regularly use credit cards, you may want to consider switching over to a credit union to save money on fees and interest. The National Credit Union Administration found that credit cards issued by credit unions, on average, charge approximately 1 percent less on interest.
3. Save money on fees
Banks are for-profit, meaning they will charge you fees on everything from maintenance to a late payment. Credit unions are non-profit, meaning they do not have to charge you near as many fees as banks do to stay in business.
4. Lower interest rates on loans
We all need to drive cars and live in homes, and most of us will need a loan in order to purchase these big-ticket items. Credit unions tend to offer much lower rates on car loans. In June 2011, a study conducted by Datatrac found that interest rates on car loans were about 2 percent less at a credit union than at a bank.
5. Better customer service
Traditional banks are all about online services and have a “do-it-yourself” mentality when it comes to banking. Why? Well, simply put, the less the bank has to do for you, the more money it saves. Credit unions pride themselves on excellent customer service skills. You’re a member of a credit union, versus you’re a customer at a bank.
6. Less fees on more advanced services
Do you use a safety deposit box? What about online budgeting tools? At a bank, it’s going to charge you for these advanced (and not absolutely necessary) features.
7. Save money on discounts the credit union offer
Some credit unions, such as ABCO Federal Credit Union, offer discounts to members on other services you may use. Discounts can include car rentals, phone plans, DIRECTV and even TurboTax.
Credit unions can save you hundreds of dollars per year by offering less fees, higher interest rates on your money and lower interest rates on borrowed money. It’s worth looking into.
Tell us: Do you bank at a credit union or a traditional bank? What are your likes/dislikes? Share in the comments below.