Credit unions may appear similar to banks. However, they differ wildly in how they operate. The products and services they offer, fee structure, and overall operations philosophy are unique to credit unions. There are a lot of advantages and benefits to opening an account at a credit union, but there are also disadvantages and drawbacks.
Looking at credit union pros and cons, there is much to learn about whether a credit union is the right partner for you and your finances.
Pro: They’re An Alternative
If you’re sick of dealing with the big banks, a credit union offers you a way out while still holding your money somewhere you can trust.
Pro: Many Are Well-Established
Credit unions are by no means a new concept to financial management. Credit unions have been active across Canada for over a century, acting as a way for communities to fight against the domination of banks.
Pro: They Are Not-For-Profit
A credit union is not there specifically to derive profit from its members. They are there as a community-driven effort to support members’ financial goals.
Pro: There Are Many Credit Unions
There are all sorts of credit unions differing in membership requirements, fees, and more. Like banks, one can compare credit unions to see what best suits their needs and to uncover what they qualify for.
Con: You Have To Be A Member
A credit union won’t do business with you if you’re not a member. To become a member, you must meet eligibility requirements and make a small deposit, often as little as a few dollars, to a charity of the credit union’s choice or to be used as a membership fee.
Pro: They Are Owned By Members
When you join a credit union, you become a member or a shareholder. This allows you to vote on policies and get insider information about the philosophy of a credit union. Your voice is amplified in deciding how credit union policies work.
Pro: Lower Interest Rates
Credit unions charge lower interest rates on loans, including mortgages, to attract and benefit members. Few banks can match the interest rates of a quality, community-centric credit union.
Pro: Higher Deposit Yields
In addition to lower interest rates and other benefits of a credit union, they also have higher yields on savings.
Con: Limited Accessibility
Credit unions usually have fewer branches than banks do. They may be more difficult to reach or get to in a rush.
Pro: They Offer Similar Services
Every credit union is different. They may not offer all the same services as a bank. However, many do. Credit unions often have chequing accounts, savings accounts, investment accounts, mortgages, auto loans, student loans, and credit cards.
Pro: Lower Fees
In totality, you can save a tremendous amount of money in fees doing your money management at a credit union compared to a bank. A credit union may erase some fees and offer discounts for specific accounts.
Pro: They’re Local
If you ever have an issue, it’s not like dealing with a physical or online bank. Credit unions are often local. They are more or less ready to help its members however they can, with representatives available locally to give answers.
Con: They May Not Have ATM Access
Many credit unions are a part of a large ATM network. However, some credit unions are not, so withdrawing money can be difficult.
Pro: Insured Deposits
Like at banks, up to a specific amount of deposits at a credit union are insured, providing peace of mind that your accounts are fully protected.
Pro: Personal Service
Most credit unions are local. Their service is generally kinder and more personal. There may also be some leeway to negotiate or appeal a decision relating to loan approval/denial and similar things that may come up.
Con: They May Not Have The Latest Products
A lot of credit unions are not up to date on tech. They may be unable to offer online banking, mobile banking, and similar conveniences. This may make it more difficult to access your money and use it.
Pro: It Can Be An Education
As credit unions are member-owned, many invest in educating their members and encouraging better financial literacy. You may discover access to various resources, such as seminars, articles, calculators, and additional tools to help you sharpen your money skills.
Pro: They’re More In Line With Customer Needs
Technically, a credit union does not have customers. They have members. As members vote on policies, operations at a credit union are generally more in line with the needs of its members rather than having to appease corporate stakeholders.
Pro: More Customer Satisfaction
Many customer satisfaction studies demonstrate how credit unions often have higher customer satisfaction than banks.