5 Reasons You Should Open an Account at a Credit Union

by Caramel World Traveler
Shay Olivarria

Shay at a book signing at Smiley's Book Store in Carson, CA

[This is a Guest Post By Shay Olivarria and will be part of our monthly series entitled The Money Curve: Lessons in Financial Intelligence with Shay Olivarria]

Many folks don’t understand what Credit Unions are or what they do, so this month we’ll take a look at why opening an account at a credit union might be a good idea. Full disclosure: I have had an account at a credit union since I was 15 years old and I deliver financial education classes for a Credit Union, so I may be a bit biased. Take everything I say with a grain of salt and do your own research.

# 1 Traditional banks don’t care about you.

Traditional banks exist to make money for shareholders. This means that regardless of how much money they spend to make you think otherwise, their main concern is for a healthy bottom line not for your welfare. Sometimes their desire to earn profits dovetails with your desire to be financially solvent, but don’t be fooled this is a coincidence not an overarching theme.

# 2 Credit Unions exist to partner with communities.

Credit Unions, on the other hand, exist as not-for-profit entities that exist to use cooperative economics to improve the communities they serve. Every member of the credit union essentially “owns” part of the Credit Union. It only takes about $5 to open an account at a local branch.

# 3 Loan rates are better

I’m not making this up. Loans offered at Credit Unions are usually at least 1% and usually at least 2% lower than at traditional banks. Credit Unions offer auto loans, home loans, business loans, personal loans, and various other products and services to members, but the loan rates are usually lower than traditional banks. How is this possible? Credit Unions don’t have to make much money from each loan. Remember, they are not in it to make money.

# 4 Better Customer Service Experience

Credit Unions tend to have fewer members, this allows them to have a more personal relationship with the members they have. Of course, you’ll still have a checking account number, the difference is you won’t be a number. This also extends to loans. Credit Unions still want to see your collateral and credit scores, however they also take into account the person you are and the relationship you have with the Credit Union.

They also partner with other Credit Unions to provide you the best service. Most Credit Unions are part of the Coop Network.  The network ensures that even if you’re branch is far away from where you are you’ll have access to ATMs and deposit and withdrawal capabilities by using services from other Credit Unions that are part of the Coop Network. Using these services is free to Credit Union members.

# 5 Fees are lower

At the end of the day, a financial institution does have to earn enough money to pay for overhead business expenses like lights, marketing, and those pens we use to fill out forms. Credit Unions charges fees to things like account maintenance and overdrafts. The difference is that the fees are usually lower. The average overdraft fee at a Traditional Bank is $32. The average overdraft fee at a Credit Union is $28. Those small savings can really add up over time.

Interested in opening an account at a Credit Union? Visit the National Credit Union Association (insert http://www.ncua.gov/Resources/ConsumerInformation/aboutJoiningCUs.aspx ) to find out more about Credit Unions, how you can join a Credit Union, and how many Credit Unions are in your vicinity.

About Shay: Shay Olivarria is a motivational speaker and financial coach. She specializes in financial education for the 15 to 30 set. Her new book 10 Things College Students Need to Know About Money will be out May 2010. For more information about Shay or her work please visit www.BiggerThanYourBlock.com.

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