Big banks can feel impersonal and intimidating, with powerful executives who answer to shareholders, not customers.
Credit unions, by contrast, have built a reputation as member- and community-focused financial institutions.
That impression is driven by a number of factors, including lower fees, competitive interest rates, helpful staff and straightforward accounts. On all of those fronts, credit unions rate higher than large national banks, according to an annual report by the American Customer Satisfaction Index.
Those qualities don’t just make people happy with their credit unions; the low costs and responsive services these institutions may provide can also empower consumers to take control of their finances. Here’s how:
- Lower fees for the same services can mean more of your money stays where it belongs: with you. Many credit unions will even reimburse ATM fees charged to you by other service providers.
- When it comes to lending, credit unions typically charge less, according to statistics from the National Credit Union Administration. For example, the average rate on new and used auto loans at credit unions is almost half what banks charge. Higher returns on checking and savings balances add to your resources by giving you more money to work with. Although the impact may be minimal now, with interest rates near historic lows, the earnings could increase as the economy improves and rates rise.
- Credit unions tend to be smaller, so you can build relationships with the people who work there. Those employees can grow to know you, your family and your financial needs, and help you make decisions that take all of those into consideration.
Banking locally has other benefits, too:
- Credit unions are invested in the neighborhoods and members they serve. A credit union’s business depends on the financial health of its members, who also own the institution, so the managers want their members and the community to thrive. As a result, they may be more willing to work with borrowers who fall on hard times by deferring a loan payment or refinancing a mortgage to reduce monthly payments.
- Credit unions are not-for-profit organizations, so their aim isn’t to maximize profit from every transaction. As a result, they’re more likely to recommend products and services that best fit your needs, rather than those that deliver the most revenue.
- Small businesses often rely on local financial institutions for loans and other services. Credit unions are more likely than large banks to approve small business loans , according to a Harvard Business School report in 2014. It shows these cooperatives approved 51% of small business loan applications they received from 2011 and 2013. Big banks approved just 17% during that timeframe, according to the report.
This monetary support can help companies grow, hire new employees and, in turn, contribute to the health of the local economy.