Bank profits are at an all-time high. This comes at the cost of their customers paying very high fees. These high fees have led people to explore other options to save their hard-earned money. An option that many people have taken a liking to is local credit unions.
What is a credit union?
Credit unions, like banks, offer their customers access to financial products such as checking as well as savings accounts, loan products, credit cards and so on.
There are also a couple of major differences between banks and credit unions. Two of the biggest differences are explained below:
Credit unions are not-for-profit institutions. This lets them offer their customers higher interest rates on their savings accounts and so on. In addition to that, they can also offer their customers lower interest rates on credit cards as well as loans.
Credit unions are member-focused. This is another way of saying that it is owned as well as operated by its members instead of being run by stockholders like how most banks are run. The initial deposit you make makes you a member of the credit union. It also gives you the right to a say in the credit union's decisions.
This type of an organizational structure requires its potential members to meet certain requirements before becoming a member. These requirements are different depending on the credit union in question. For example, a credit union for teachers might only accept membership from teachers who teach in a certain chain of schools.
Advantages of a credit union over a traditional bank
High-interest rates – You get access to higher interest rates on all of your deposit accounts such as your savings, checking and money market accounts. The rates can be between 4 to 10 times the interest rates offered by a local bank
Customer-focused banking – Since it is a non-profit organization, the members all work to serve each other. In a traditional bank, the management and board of directors are all working to make as large of a profit as possible.
If you’re looking for an alternative financial arrangement to manage and grow your wealth, credit unions are a fantastic alternative to traditional banks.