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Monday, June 29, 2015

Why Should I Use a Credit Union

Credit Unions - Why Should I Use Them?

When driving around town you will see both credit unions and banks in your neighborhood. People sometimes do not know or understand how a credit union works. Plus everybody is different especially when you are talking about their money and savings, some people may prefer to open an account with a large commercial bank while others may prefer to go with a small credit union where they get more personal attention. Here are some advantages and and a couple of disadvantages of credit unions.

Credit unions are similar to banks but are owned and operated by its members. A credit union is a not-for-profit, cooperative financial institution that is owned and controlled by its members. A credit union is obligated to take the money it makes and invest it back into the operation or uses the profits to better the institution. 

Once you open an account with a credit union you automatically become a member. A credit unions goal is to deliver great customer service and please their members. At credit unions you the members are the owners. At some credit unions they even allow members to vote on policies concerning the operation of the facility. At banking institutions especially the larger one’s their main focus is to make a profit and making their stock holders happy. This is why there are so many fees for every little transaction you make. Anything they can do to increase the revenue of the bank they will do. At credit unions if there are any fees they are much less than regular banking institution. The lower the fee’s the more money you can keep in your pocket.

Credit union employees you usually will see time after time, this is nice because you can build a relationship with the person that you deal with and gain their trust.  This can come in handy when you have questions about your account or need a loan. At a regular bank you hardly ever get a chance to build a relationship with your banker, so when you have a question or need a loan you may not feel as comfortable as you would at a credit union. Credit unions are here to help you but a bank is only here to make money.

ATM's at credit unions is service that you usually don’t get charged for if you use the credit union ATM, the disadvantage is that the ATM’s can be hard to find because there are very few of them. They usually will only be located at the credit union location. You can save money on ATM fees but the con is you will have to travel out of the way to use the ATM or pay a service fee for using a ATM that is not connected to your credit union.

Credit unions like to offer its members lower interest on their loans, such as lines of credit, credit cards, auto loans and other types of small loans. Credit unions usually don’t like to do home loans because it ties up the credit unions money for a long period of time. Credit unions usually don’t have strong stipulations on their loans and offer lower interest rate which makes their loans look more appealing than the larger banking institutions. If a member has poor or weak credit most credit unions are willing to sit and work with you to obtain a loan that fits your needs.  Most of the time they will be able to help you get the loan that you need.

Disadvantages to belonging to a credit union are few, one of the minor disadvantages is that not everyone qualifies to be a member.  Unlike banks that are open to anyone, laws require credit unions to have a defined field of membership, which means you'll have to be a member of that group to access the credit union and its services. 

The field of membership can be broad, including an employer, church, school, community and employee group.

Gaining access through an employer is the easiest way to become a member, but community-based credit unions are also widely available in many cities and towns across the country. The vast majority of consumers, especially in large communities and cities have an opportunity to join a credit union.

As you can see the pros do heavily outweigh the cons for belonging to a credit union. Look around in your community to find a local credit union to see if you qualify to be one of their members. If you don’t check out others in your area, you will probably find one that you can meet their qualification’s.

Once you do find one that you can belong to make sure you sit down with one of the credit union advisers to find out all the services that they offer.

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