It’s the ultimate showdown—credit unions versus banks! Like in the classic battle of blondes versus brunettes, which financial institution ultimately has more fun? If only it were that simple. Comparing a credit unions vs. bank is a little like comparing apples to oranges. Each has its own strengths as well as areas in need of improvement, and the right choice for you will depend a lot on your lifestyle and banking preferences. Before we delve into the fun facts behind credit unions, let’s consider the question, What exactly is a credit union?
Google describes a credit union as “a nonprofit-making money cooperative whose members can borrow from pooled deposits at low interest rates.” That may sound like banking mumbo jumbo, so let’s break down the key differences between banks and credit unions, and discover what makes credit unions so unique, or in the case of iQ Credit Union—uniQue!
1. Credit unions are surprisingly easy to join.
In many instances, it can be a simple process to join a credit union. In iQ’s case, if you live, work, or go to school in Washington state or certain Oregon counties, you are qualified to join. Families of iQ members are also accepted. If you’d like to wander or explore with us, check out our website at iqcu.com.
2. Credit unions have relatively low interest rates.
On average, credit unions offer higher savings rates and lower loan rates, which means your savings grow faster and your loans cost less. If you have qualified for a loan, take a look at the interest rate. Credit unions also tend to charge lower fees and require lower minimum deposits when opening an account.
3. Credit unions are not-for-profit organizations.
Huh? Don’t worry, we’ll explain. A not-for-profit organization is one that does not earn profits from its owners or donors. All the money earned or donated goes toward pursuing the organization’s mission and objectives and toward keep it running properly.
4. Most credit unions have a higher level of customer satisfaction than banks.
Generally speaking, credit unions rank near the top of the annual American Customer Satisfaction Index, which is not the case for most big banks. In 2017, credit unions as a whole scored an 85 on the index, whereas banks scored a 76 on average. This could be a reflection of the higher saving rates and lower loan rates offered by credit unions—and another difference between a credit union vs bank.
5. Your money is protected.
This is arguably the biggest difference between credit unions and banks. A credit union is owned and run by its members, making it a people-before-profits enterprise. The members and a board of directors decide where the money goes for the betterment of the community.
6. Credit unions offer mortgages.
Looking for a house? No problem. Many credit unions offer a variety of mortgage options, including fixed-rate, first-time home buyer, adjustable-rate, federal housing, and Veterans Administration mortgages.
7. Credit union membership is for life.
Yes, it’s true. Once a member, always a member. And that counts for family members too. Joining a credit union means you will always have a reliable place to keep your money and a trustworthy partner to help you manage your finances—even if you move out of the country or switch jobs.