When it comes to credit unions versus. banks, credit unions are ahead. Attracted by such advantages as lower rates on loans and credit cards, and higher rates on savings accounts, credit union membership continues to grow, according to the Credit Union National Association. As of 2017, there were an estimated 110 million members of the nation’s nearly 6,100 credit unions.
Following are at least five reasons why you may want to be a member of this growing financial movement.
- Customer satisfaction. For the past decade, credit unions annually outscore banks when it comes to customer satisfaction, according to the American Customer Satisfaction Index. Based on its 2016 survey of finance and insurance industries (its most recent survey), credit unions had a customer service rating of 82 out of 100, whereas bank had a rating of 80. Credit unions also scored higher than banks when it comes to “courtesy and helpfulness of staff” with a rating of 90 compared to 88 for banks.
- Convenience. The credit union industry has something that banks don’t have – and never will have: a nationwide shared branching network, managed by CO-OP Financial Services.
This cooperative network enables members of participating credit unions to enter another credit union branch and transact their business as if they were in their own home branch. Larger than such giants as Chase and Bank of America, the CO-OP Shared Branch network is the nation’s second largest network with 5,671 conveniently located branches throughout the U.S. This compares to Chase’s 5,567 branches and Bank of America’s 4,867 branches, according to July 217 FDIC data.
If you depend on ATMs, a credit union is also for you. CO-OP manages the nation’s largest network of surcharge-free ATMs with 30,000 units in the U.S. CO-OP provides a locator to easily find CO-OP Shared Branching and CO-OP ATM locations by visiting https://co-opcreditunions.org/locator. Or, members can download the new CO-OP ATM and CO-OP Shared Branch mobile Locator app at Google Play and iTunes stores.
- Benefits of membership. Because of lower interest rates and attractive terms, CUNA Mutual Group states that members are joining credit unions “in droves” to get a credit card, home mortgage, auto loan and other forms of credit. The American Customer Satisfaction Index points out in its customer satisfaction report that credit unions rank above banks when it comes to offering more competitive interest rates (80 versus 73). Here are recent rates reported on BankRate.com that further illustrate this point (all rates are quoted as APR):
Auto loans: The lowest interest rate for a 36-month auto loan is 1.49% offered by a major credit union compared to the lowest reported bank rate at 2.19%.
Credit cards: A credit union we found offered a credit card that charges a low purchase rate of 7.74% while the lowest bank sponsored card we could find charged 11.99%.
Home mortgage: The lowest fixed-rate, 30-year mortgage was offered by a credit union at 3.879% and the lowest bank mortgage was 4.027%.
CDs and other investments: Credit unions also outshine the major banks and other financial institutions when it comes to interest rates on certificates of deposits and investment vehicles. One credit union we know is offering a one-year CD earning 3% (APY), which is much higher than the national average of 1.71% among banks.
Student loans: If you are college student or soon-to-be student looking for a loan to help you cover your expenses, you may want to talk to your local credit union, most of which provide student loans at attractive rates and terms. For a list of credit unions that offer student loans, visit Credit Union Student Choice, an Internet portal that lists nearly 250 credit unions nationwide that provide student loan programs.
- Mobile banking. Credit unions are ahead of the game when it comes to mobile banking, according to a December 2016 study from Malauzai Software, Inc. It reports that 81 percent of credit unions offer their members a mobile banking app while only 65 percent of banks do so. “This has been true since we started counting,” the report states. “Credit unions are more aggressive. They are being pushed harder by their members to get cool mobile apps in the store.”
- People helping people. Unlike banks that are profit oriented first and foremost, the mission of the not-for-profit credit union industry is “people helping people.”
Credit unions are different from banks in at least two major ways. First is the fact they are not-for-profit entities owned by their members. Second, each credit union is governed by a volunteer board of directors whose primary goal is to provide the best financial products and services to their fellow members with the most attractive rates and terms.
“Our members are fiercely loyal for this reason,” states the Credit Union National Association. “They know their credit union will be there for them in bad times, as well as good. The same people-first philosophy causes credit unions and our employees to get involved in community charitable activities and worthwhile causes – just ask us.”
For credit unions, good business is being a good neighbor and loyal friend, and more and more consumers are choosing them over the big banks.