Financial institutions aren’t all created equal. Some are big, some are small, some offer great savings rates and others don’t pay interest at all. If you’re dissatisfied with your bank, it might be time to look elsewhere.
Here are a few good reasons to give credit unions a try.
Not just a nonprofit
Unlike banks, which operate for profit, credit unions are member-owned, democratically run nonprofits. That means you’re more than a customer; you’re a member, and you get to vote on board directors and other officials. Each member’s vote carries equal weight, regardless of deposits at the credit union.
More favorable rates and lower fees
Credit unions’ not-for-profit status lets them distribute their profits to members through returns on savings and investments. As a result, credit unions provide higher average returns on a national level than traditional banks do. Credit unions’ average rates for savings and loan products beat or tied those of traditional banks in every category surveyed, according to a September report by the National Credit Union Administration.
Credit unions charge lower fees on average than traditional banks as well. A 2012 study by the U.S. Public Interest Research Group found that 60% of credit unions provided completely fee-free checking accounts, while only 24% of big banks did.
Community is a priority
Credit unions are known for their personalized service and community engagement. It’s common for them to give out scholarships, donations and grants, or host concerts and volunteer events.
This focus means members receive knowledgeable customer service. Representatives generally try to get to know them and can provide valuable financial education and resources. Credit unions also routinely offer member perks, such as discounted auto-buying services, free financial tune-ups and free credit reviews.
Not cutting-edge but still convenient
Of course, being rooted in a small community can have drawbacks. Large banks generally have many more branches across the country and more up-to-date technology than credit unions.
But credit unions still offer a variety of savings and investment account choices, and many are part of shared branching and ATM networks, giving members access to thousands of ATMs and branches nationwide. And though the technology might not be cutting-edge, popular features such as mobile and online banking are now available at virtually every credit union.
How can I join a credit union?
To qualify for membership in most credit unions, you simply have to live, work, go to school or worship in the area they serve. That said, there are several top-notch credit unions that you can easily join with only a $5 to $10 initial donation.
Before you make the switch to a credit union, compare its services to banks in your area to make sure you’re signing up for the institution that most suits your needs and values.
Amber Murakami-Fester is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org.