With Big Banking Failing to Meet the Needs of Businesses, Are Credit Unions the Answer?
Over the past decade or so, small-business owners have started changing the way they look at their banking needs. At one time, banks could essentially charge whatever fees they wanted, and business owners would just cringe and call it the cost of doing business.
But today’s small-business owners are tired of putting up with big banking’s tendency to charge ridiculous fees, especially after the recent recession, and they are doing something about it.
Modern business owners are less trusting with their money; they compare services and costs, and they do their research. The result is almost a mass exodus from large banking institutions to the more member-friendly waters of smaller community banks and credit unions.
If you are one who stands on the edge of indecision, then here are five things you might be surprised to find out about credit unions.
#1 – Some Credit Unions Are Member-Specific, and Some Are Not
One of the common misconceptions about credit unions is that you have to be an employee of an affiliated employer in order to join. While this was at one time true (and still is in some credit unions), more and more credit unions are starting to accept members from outside of their usual affiliations.
They may still have certain membership requirements that need to be met, but they are often not as strict as you might think. In other words, do not let the fact that it is a credit union stop you from joining, before you learn about the requirements to join. You just might be surprised when you are accepted.
#2 – Credit Unions Offer Higher Rates on Savings, and Lower Rates on Loans
Unlike big banks, credit unions are non-profit organizations. This means that all of the profits that they do make are delivered back to their members in the form of lower interest rates on loans, and higher interest rates on savings accounts.
#3 – A Credit Union ATM Card Can Be Used at Practically Any ATM
Some people believe that joining a credit union restricts where they can use their ATM cards to withdraw funds without being charged a costly surcharge, but this is not entirely true. Many of today’s credit unions belong to the Co-Op Network, which is a collection of more than 28,000 ATMs that offer surcharge-free withdrawals.
These ATMs can be found all across the U.S. and Canada at retailers like 7-Eleven, Costco, Walgreens, and more.
#4 – Some Credit Unions Are Not as Member-Friendly as Others
Although credit unions are member-driven, not all credit unions put their members first. In some cases, these institutions tend to bury information they do not really want their members to know about deep in their agreement documents, such as their right to change the terms they offer on existing CDs whenever they deem it necessary.
This might be the exact reason why you want to leave big banking, so before you sign up at your local credit union, always read the fine print to ensure you are not going to be facing the same issues at a different financial institution.
#5 – Credit Unions Are Not Known for Their Investment Products
Credit unions, as much as they offer savings in some departments, often seem to offer investment products that tend to run on the expensive side. One of the reasons for this is that in some cases, the investment advisers who are pitching their products to the credit union’s members do not actually work for the credit union.
Instead, they are independent investment firms that are provided access to the credit union’s member data, in exchange for sharing a portion of their sales with the credit union. While this is not the case with every credit union, it is something that you should consider if you plan on purchasing any investment products through the credit union.
Before you purchase an investment product through your credit union, research the product thoroughly so you are fully aware of the costs associated with it.