Across the county, credit union membership increased to approximately 1.3 million new members in 2013. This is a record number of consumers opting out of big box banking and opting in to credit union membership. However, that doesn’t mean you need to jump on the boat of lemming-like mentality and give up your big bank for what might seem like credit union bliss. Before changing banks, weigh the pros and cons. When it comes to credit union membership versus big box banks, here are four.
1. Service Differences
Pro: Credit Unions are Member-Centric
At their core, credit unions are cooperatives owned by the members. These smaller banking entities view consumers as members, not profit margins, making most customer service experiences for members more enjoyable and with less wait time.
Con: You Might Not Qualify
All credit union account holders are subject to membership criteria, whatever that criteria a credit union specifies. It could be linked to employers, residential areas or other associations. With that being said, some credit unions have opened up membership to entire communities, making joining a little easier. Check the requirements of credit unions in your local area to see what you might qualify for.
2. Loans, Fees and Rewards Programs
Pro: Loans are Cheaper and Savings Accounts Pay More
Because credit unions operate on a not for profit basis, they pass that savings on to their members. This means lower interest rate loans. And, since credit unions aren’t publically traded, they have more control of the funds coming in and going out, meaning higher savings and CD rates, when compared to larger banks.
Con: Credit Unions Don’t Do Much in the Way of Rewards
For cash back fanatics and travel point earners, credit unions might not be your cup of tea. On average, larger banks will pay up to six percent in rewards points on most purchases. In contrast, the best that even the best credit union could pay out in rewards was 1.5 percent, with a cap.
3. Balance Requirements
Pro: No Minimums
Most large banks stipulate minimum balance requirements in exchange for no fee checking, whereas over 72 percent of credit unions nationwide had no minimum balance requirement for members, and no monthly fee.
Con: Less Technology
Larger banks offer up technology goodies such as remote deposit, mobile apps and online banking and bill pay. Since credit unions are smaller, customer driven entities, it is harder for them to do this, so they might not always be able to keep up in that department, making them less convenient for the tech savvy consumer.
4. Share and Share Alike
Pro: Shared Services
Many credit union members benefit from shared braches and ATM’s. Currently, there are over 30,000 ATM machines and 4,700 credit union branches available to credit union members from different areas and even different credit unions. Yet, with over seven billion people on the planet, is that enough?
Con: ATM’s Still Hard to Find
Sometimes having an account with a bigger bank makes sense when it comes to convenience. These larger entities have ATM machines on just about every corner, if not several within easy consumer reach. Regardless, with the ever increasing availability of cash back options at most major retailers, the playing field remains equal between big banks and credit unions when it comes to getting a small amount of cash back when you go in to purchase a pack of gum at the corner store.
As always, it’s your money, but spend it wisely.
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