Credit unions certainly have a lot to offer that traditional banks can’t compete with, but that’s not to say they don’t have any drawbacks either.
Credit unions aren’t for everyone. Before you choose a credit union over a bank, first consider both the advantages and disadvantages of credit unions. Your individual financial needs will help you determine if a credit union is the right choice for you.
Advantages of Credit Unions
- You’re More Than a Customer. As a member of a credit union, you are not only a customer, but part-owner of the organization. Aside from receiving better service, you possess voting rights, have a say in the operation of the credit union and receive dividends.
- Interest Rates
Beat Banks.Speaking of dividends, you’ll earn a pretty penny on deposits compared with a bank. Credit unions are not-for-profit organizations and share surplus funds in the form of higher interest rates on deposit accounts. According to the Credit Union National Association’s national rate index. the average interest rate on a one year CD at a credit union is .44% APY, compared with .30% APY at a bank.
- Community Comes First. Credit unions are owned and run by members of a common community or workplace. For example, membership at a teacher’s credit union is limited to professionals in the educational field. Services provided by a credit union are meant to benefit the local community and depositors living there.
Disadvantages of Credit Unions