Q: I’m thinking of switching my checking account to a credit union. How is it different than using a big bank?
A: You’re not alone. Many Americans are dissatisfied with their banks. And many of them, like you, are looking to make a switch. In fact, a Gallup poll found that as many as 74% of Americans had “some or very little confidence” in banks, while only 10% said they had a “great deal” of confidence.
As a credit union member, you can expect to have a much more rewarding and meaningful experience. Credit unions are member-owned and not-for-profit. They are more attuned to the needs of their members and are not driven by investors or a bottom line. Credit union members own a piece of the institution, and the revenue created through operations gets returned to members in the form of better rates, technology enhancements and more.
From the outside, banks look sophisticated and glamorous. There’s all that hype, glossy advertising and flashy logos. When it comes down to it, those things don’t matter much. What counts is how each institution will look after your money and what kind of service you can expect from them. While banks and credit unions offer nearly identical services and account choices, there are some subtle differences.
Let’s take a look at how having your checking account at a credit union differs from using a bank for the same purpose.
1.) Account fees
To the unsuspecting consumer, big banks may not seem like money-hungry monsters. While they’re happy to hold onto your money, and they might even be super-helpful in setting up your account, once it’s up and running, expect to get hit with fees – just for having an account! And these fees don’t come cheap. According to a MoneyRates survey, the average monthly maintenance fee for a bank checking account is $12. That’s nearly $150 coming out of consumers’ pockets each year!
On the flip side, many large credit unions offer free checking or make it very easy to qualify to have the fee waived. This gives you the ability to set up your account and keep it running without it costing you a dime.
Credit unions tend to have less overhead than banks, so there is less reason for them to try squeezing more money out of each consumer. Why, then, would you fork over your hard-earned money to help keep a bank profitable when you can use it to help your own net worth grow?
2.) Overdraft fees
Sometimes, you may miscalculate how much you have in your account and you’ll overspend. If you make this mistake with a checking account at a bank, though, it’s more than just a face-palming moment of regret – get ready to cough up those overdraft fees!
These fees usually top $30, and some banks will make consumers pay the penalty for each transaction they make during overdraft.
Most credit unions understand that mistakes happen. They’ll be more likely to forgive you for the occasional error. And, while some credit unions do charge an overdraft fee, on average these fees are a lot lower than what banks demand.
Why risk penalization for an oversight?
3.) Fewer strings attached
Banks will happily accept your money – so long as you’ve got enough of it, that is. Most big banks won’t allow you to open a checking account unless you have a minimum balance of several hundred dollars. In contrast, an incredible 76% of credit unions surveyed by the 2016 Bankrate Credit Union Checking Survey reported that they have no minimum balance requirements at all.
If you’re looking for a place to park your money without having to jump through an endless series of hoops, there’s no question here!
4.) The government regulates credit unions too.
Like banks, credit unions have a governing authority. This means a federally insured credit union, just a like a federally insured bank, offers federally insured accounts up to $250,000. So, protection of your money is crucial. No matter which kind of institution you choose for your checking account.
For credit union members, though, it gets even better. Credit unions actually face more restrictions on their investments and loans than banks do. This means your credit union has to be super-careful with your money. They can’t make any rash decisions or investments that might hurt you as a member.
For credit unions, it’s all about doing what’s best for the membership.
5.) Superior service
When you’re banking with family, you don’t have to worry about overworked tellers, curt managers or representatives who are indifferent to your individual needs.
When you stop by your credit union, you’ll be greeted with friendly, familiar faces and representatives who actually care. They’re always ready and willing to help you with whatever you need – whether it’s a question about your checking account, some personal finance advice or direction in a major life purchase.
They’ve got your back – always.