NerdWallet puts your University Credit Union against the Big Bank on campus and tells you who comes out on top.
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Your Local Credit Union?
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Credit Unions Offer Big Benefits
Consumers looking for low fees, low interest rates on loans and great customer service can find them at credit unions. More than 6,000 credit unions have 101 million members, according to data from the Credit Union National Association.
A credit union is a nonprofit financial institution owned by its members. Many members volunteer to serve on the board and in other administrative positions.
The goal of a credit union is to provide low-cost financial services and great customer service to its community and to pass on savings to the members. Credit unions have consistently led all financial institutions in the American Customer Satisfaction Index. Consumers are asked about these aspects of a financial institution:
- Variety of financial services
- Adding or making changes to accounts
- Interest rate competitiveness
- Branch number and location
- Understanding account information
- ATM number and location
- Staff courtesy
- Financial transaction speed
In the survey released in November 2015, credit unions scored 81, while banks received a 76. Credit unions stood out from big banks in the areas of staff courtesy, transaction speed, service variety and competitiveness of interest rates. Banks led only in ATM number and branch locations.
Who Can Join a Credit Union?
Many people think they aren’t able to join a credit union, but eligibility has expanded over the years. Traditionally, you had to work at a certain company or school or be in the military. But today, to join many credit unions, including the Credit Union of Georgia, you just have to be a resident of one of the counties in which they operate, or be an employee or student of certain schools, businesses and agencies. If you don’t qualify to join, an immediate family member may be eligible, and you can ride their coattails to membership.
Lower Loan Rates
Getting a loan for a car, home or personal use from a credit union instead of a bank has a few advantages. For starters, credit union rates are lower. In fact, the average rate nationally for new and used car loans issued by credit unions was more than 2 percentage points below those issued by banks, according to a 2015 analysis by the National Credit Union Administration, a federal regulatory agency. That’s a lot of savings over the life of the loan.
Besides the lower rate, lending officers in your community will make the loan decisions. Big banks look at your credit score and how you rate in certain categories and say yes or no. Credit unions, though, have a specific mandate to provide their members, especially those of modest means, with access to credit.
That gives them more flexibility in looking at your broader credit history and other aspects of your financial life as they decide whether to approve your application. As a result, approval rates for both personal loans and for small business lending are higher at credit unions than among other financial institutions.
All the Products You Need
Credit unions offer a variety of checking accounts, including ones that earn interest. The minimum balance you need to open a checking is often lower than at banks, usually around $25. Many credit unions offer checking accounts designed specifically for the needs of students and seniors.
While those who responded in the customer satisfaction survey said big banks had more ATMs and branches than credit unions, that’s changing too. Many credit unions belong to CO-OP Financial Services, which allows credit union members to use ATMs and credit union branches across the nation.
Some people may think you can’t get all of the financial products, like credit cards, at credit unions. Credit unions offer cards through international payment networks such as Visa, often with lower rates and fees and with purchase protection, car rental insurance and other perks.
Banking on your smartphone is now a way of life for many consumers. In the March 2015 survey of Consumers and Mobile Financial Services, the Federal Reserve found that 71% of adult Americans have a smartphone and that 52% have used their phone for banking.
The knock on credit unions used to be that they didn’t have the technology, like online banking and mobile apps, that the big banks do. That’s been answered by credit unions rapidly adding these features.
Be a Joiner
If you don’t know of a credit union in your area, you can search for one at mycreditunion.gov. Enter your ZIP code and you’ll see the credit unions and their distance from you. Each credit union’s website will show you who is eligible to join. Don’t be surprised if you qualify, even if you thought you wouldn’t.
Ellen Cannon, NerdWallet
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