One of the most common questions people have when it comes to personal financial planning is whether they should have their primary accounts with a bank or a credit union. Credit unions are more likely to have lower fees and higher interest rates, yet fewer than a third of all Americans currently use credit unions, despite there being such national distrust in big banks.
The biggest way in which banks have an advantage over credit unions is accessibility, simply because major banks are all over the place with regular hours and great mobile and online tools. Credit unions typically are meant to serve local areas, which means they might not even exist outside of that specific area and would not have branded ATMs. However, most credit unions do offer to reimburse your fees for ATMs if you withdraw cash out of your network. But in all other ways, credit unions offer the clear advantage.
- Low fees. Unlike big banks, which are somewhat notorious for charging major fees to customers for over drafts or monthly maintenance, credit unions are smaller operations, which means customers take advantage of overhead savings. More than 70 percent of the nation’s largest credit unions offer free checking versus just 39 percent of banks.
- Higher interest rates. Credit unions do offer better interest rates but if you’re working on building long-term savings from compounding interest you’re better off using other investment tools. Many banks do not offer interest at all on basic savings account these days, while credit unions that offer interest rates provide an average of 0.12% rates.
- Customer service. The biggest difference between banks and credit unions is in customer service. Simply put, the bigger you get, the harder it is to maintain outstanding customer service. With the vast majority of Americans being customers of big banks, it should come as no surprise that many of the largest banks in the nation do not score well in the American Consumer Satisfaction Index. Credit unions, being smaller and more localized, are more likely to be able to provide personal customer care.
While there are certain inconveniences in terms of accessibility, credit unions tend to at least have a slight edge over banks in most other areas. However, it all comes down to personal preference. For more tips about how to store your money and plan your spending, contact us today at Money Mastery.