- Choosing a financial institution that supports your financial goals isn’t always easy. With over 10,000 credit unions and banks in the U.S., picking the one that’s the best fit can seem like a daunting task. While you can quickly narrow your selection by limiting your choices to your state of residence, you might still be left with more than a handful of choices. For example, Vermont has 19 credit unions and 11 banks.
Focusing on the key differences between credit unions and banks might make it easier to decide which one is right for your situation.
Members vs Shareholders
1. Credit unions offer lower interest rates.
When you need to borrow money for a home or vehicle purchase, securing a low interest rate is just as important as qualifying for the loan. If the rate is too high, you may not be able to comfortably afford the payments. Eligible credit union members receive loans with lower rates, deposit requirements, and fees when compared to other financial institutions.
Each quarter, the National Credit Union Administration (NCUA) compares the national average rates for over 20 common loan and deposit products at banks and credit unions. In nearly every category, credit unions pay members more for deposits and charge less for borrowing.
2. Credit unions have members. Banks have customers.
This distinction isn’t a marketing ploy, but a representation of the fundamental difference between the two types of institutions. Credit union members are part-owners with voting rights. There are no membership dues, mandatory meetings, or supervisory responsibilities.
Unlike bank customers, who participate in a simple transactional relationship, credit union members have the power to influence the institution’s future.
3. Credit unions share profits with members.
All financial institutions care about profit, but it’s what happens to those profits that matter. Credit unions are not-for-profit cooperative institutions. They use profits to keep borrowing costs down for members. For example, Member A’s savings deposits fund Member B’s loan.
All members have access to low or no-fee checking accounts, low-interest rate loans, and savings deposits that pay a higher rate when compared to banks.
4. Banks don’t share profits with customers.
Since banks are often publicly traded or privately owned entities, they share profits with their investors, not their customers. As for-profit institutions, loan approvals and interest paid on deposits are usually less generous when compared to credit unions.
5. Credit unions are community-focused.
Local credit unions not only care about their members, but also about the communities in which they serve. Charitable fundraising, scholarship programs, and sponsorships are just a few examples of how credit unions focus on giving back to the community.
6. Credit unions offer free financial education.
Credit unions care about your long-term financial success. To support your money goals, they offer an abundance of educational resources. Many institutions provide free financial-themed seminars, blog articles, online calculators, and other resources to improve your financial health. Topics touch on nearly every aspect of personal finance, including budgeting, credit, fraud prevention, and investing.
7. Credit union employees are just like you.
Credit unions want to keep personal finance simple. The less complicated, the easier it is to save for the future, pay off debt, or achieve another financial goal. Employees understand these needs because just like you, they want to spend less time worrying about finances and more time enjoying life. Credit unions offer personalized services, financial products, and educational resources to do just that.
Let Vermont Federal Credit Union make your final choice an easy one. We offer:
— A variety of products and services at competitive interest rates
— The latest in online and mobile banking technology
— Financial peace of mind; accounts are insured up to $250,000 by the NCUA, a U.S. Government Agency
If you live, work, worship, or attend school in one of nine Vermont counties: Addison, Caledonia, Chittenden, Franklin, Grand Isle, Lamoille, Orange, Orleans, or Washington, we invite you to join us today. If a relative of yours is already a member, you are also eligible to join.
- Source: Federal Deposit Insurance Corporation and National Credit Union Administration (NCUA) Quarterly Reports