What are your thoughts on credit unions? Until last year, I had never considered using a credit union… but after unhappy experiences with Wells Fargo, US Bank, Bank of America, Chase and even local(ish) Key Bank, I was ready to try something new. We went to locally owned Twinstar Credit Union. It’s been about a year and I’m confident I’ll never bank anywhere else!
What’s the difference between banks and credit unions?
A bank is a for-profit financial institution that processes deposits, loans, and other financial services. Banks are owned by stockholders, who expect to see a return on their investment every quarter.
Credit unions, on the other hand, are not-for-profit financial institutions that perform the same basic functions. A credit union is a member-owned cooperative that does not have stockholders. When you join a credit union, you become a part owner of the credit union and you can participate in decision making process for the union.
For low income customers, credit unions are always the better choice.
Typically, banks operate for-profit and credit unions are not-for-profit. This fundamental shift can make a big difference in fees and other features. As Investopedia points out, “The process credit unions use for generating revenue benefits the members who have accounts with the institution rather than shareholders focused on profitability.” Credit unions also typically have fewer (and lower) fees than national banks. Many accounts are offered free of charge regardless of the minimum balance. They also typically offer lower overdraft and return fees than typical banks.
Fees & Overdraft Protection
Overdraft protection is something that trips up many low income customers. My credit union, Twinstar, offers an incredible service called ‘Check Sentry.’ When we don’t have quite enough money to make it at the end of the month, we can overdraw up to $1,250. If we process it all in a single transaction, we only receive one $30 Check Sentry fee.
Several months ago, we ended up owing more than we could repay. We repaid the Check Sentry overdraft at the start of every month but we kept getting behind because, well, we were paying so much money back at the start of each month. After a few months of trying to make this work, I decided to contact Twinstar. I was surprised at just how helpful they were! They forgave several overdraft fees and offered us a Bounce Back Repayment plan that divided the amount of our overdraft across many months.
Although I do not encourage you to regularly overdraw your accounts, it’s a tremendous relief to know that I can access additional money in an emergency. Since we have very little in savings, it’s comforting to know these extra funds are available when needed.
Superior Customer Service
One of my favorite things about my local credit unions is the impeccable customer service. It’s easy to reach a helpful customer service agent. I usually only have to wait a few minutes and everyone I speak to is so kind and helpful.
Credit unions provide a customer-focused banking solution because the customers are also partial owners. This is the polar opposite of traditional banks, which focus on making as much profit as possible for the investors.
When you’re looking for a loan or credit card, credit unions typically offer better rates than other financing options. They also offer better interest rates on your investments.
Find a local credit union near you!
If you’re tired of the fees and frustration of dealing with big banks, you can find a credit union near you on the NCUA website.