Credit unions and banks are largely the same. They offer basically the same types of financial services (though credit unions often have limitations as to what they can offer) and follow generally the same processes. Banks are owned by a corporation; credit unions are owned by actual people. People looking to start a savings account may look at a bank first, but that would be unfairly counting credit unions out of the picture.
Why Save With a Credit Union?
Big banks require equally sizeable commitments from their savings account holders. But, credit unions are different. Kalsee Credit Union says a credit union savings account is good for someone who can only afford to save a small amount of money regularly, or for those who cannot save that often. Unlike big bank accounts, anyone can put as little money as they can into an account and they wouldn’t need to save often.
Here are a few things to remember when saving with a credit union:
Interest Rate Differences
Interest rates in credit unions are pretty straightforward, though there is a catch. They often offer lower interest rates on loans and higher interest rates on savings. As for car loans and mortgages, it’s a bit different as well. According to financial research firm Datatrac, the average difference in interest rates between credit unions and banks shows a two percent separation, with banks offering higher rates. With mortgages, rates are more or less the same.
Not All Offer What Banks Have
Not all credit unions offer limited services, though at times they can only cater to a few specific concerns. Case in point, accounts for larger loans or savings — not every union offers these. But, when they do, it’s a win-win situation for the saver and the community that the union is serving. This situation is perfect for people who are strongly ingrained in the immediate community, but those who think otherwise would want a bit more return for their cash.
There’s Little to No Extra Fees on Accounts
Credit unions are quite popular for one thing: they often offer little to no fees on accounts; some even offer free checking and checking with interest. Many unions also require no minimum deposit to open an account, and are known to bring up their overdraft fees faster than banks.