From endless account requirements to lackluster customer service and soaring fees, big banks recently have found themselves and their services questioned by consumers. Frustration reached an apex in 2011, when one of the nation’s largest banks announced a $5 service fee on debit cards. Reaction was swift and harsh. Efforts mobilized to create Bank Transfer Day, which encouraged customers to say goodbye to big banks and their fees. Many consumers answered the call and in 2012 credit unions added more than 2 million new members.
Although the trend of moving away from banks seems new, credit unions are longstanding financial institutions in their own right, with the first U.S. credit union dating back to 1908. So what sets credit unions apart from banks? The difference between the two can best be described by comparing their focus, fees and financing.
Focus on Service
Compared to banks, which are for-profit organizations owned by stockholders, credit unions are nonprofit and owned and governed by their members. Created by members for members, credit unions often have regional or organizational ties, whereas banks are open to everyone. As credit unions aren’t profit-driven and emphasize member service, they can work cooperatively with other credit unions. Examples of this collaboration include shared ATMs and branches to provide a convenient, fee-free network for their members to use across the country.
Credit unions also have historically maintained higher customer satisfaction ratings, thanks to their emphasis on member service. Furthermore, in an effort to best serve their members, credit unions tend to have lower minimum balance requirements and less restrictive eligibility requirements to open accounts and access loans.
Fewer and Lower Fees
Big banks have become known for their high fees for basic customer services like checking account maintenance and card services. Credit unions, on the other hand, don’t need profits to satisfy shareholders like banks do. They are free to pass the savings along to their members, translating into fewer and lower fees across the board.
Financing for Their Members’ Future
Because of their nonprofit nature, credit unions pass along profits to their members through dividends, with generally higher interest rates on their members’ deposit accounts than banks. On average, credit unions also offer more attractive interest rates for personal loans and credit cards.
As a member of Navigator Credit Union you’ve experienced the benefits of using a credit union first-hand. Be sure to encourage others to see the light! Refer a friend or family member today to help them start enjoying the same excellent member service and benefits that you enjoy from your financial partner.