Credit Unions- The Advantages and Disadvantages

Years ago before the arrival of Credit Unions, people from the poorer sector of the society could not borrow from banks.  Therefore Michael Moore stated, “If your bank took bailout money, take your money out of that bank and put it in a credit union”.  Ever since, credit unions have garnered popularity and recognition.  It is interesting to note that credit unions are owned by the people who have entrusted their money in the respective Credit Unions.

What are Credit Unions?

Credit unions are not-for-profit organizations that primarily serve their members. Akin to banks, the credit unions accept deposits and offer loans besides providing an array of other financial services.  Since they are member owned they offer a safe place for investors to deposit their money or to be able to save and borrow at reasonable rates. Members may avail similar services that they get from other financial institutions like loans, mortgages, internet, home banking and much more. That is not all; they may pay the bills and make the right business investments by choosing credit unions.

How do Credit Unions differ from larger banking chains?

There are two major distinctions that may be explored as below:

  1. A credit union is a not-for-profit institution. Since they operate as non-profits, they offer higher interest rates on savings accounts. The major highlight is that they offer lower interest rates on loan products and credit cards.
  2. Credit unions are member-focused institutions that are cooperatives and owned and operated by the members. The initial membership deposit not only offers membership but also makes the investor a part of the credit union and provides a say in the major decisions of the Credit Unions.

The Key Advantages and Disadvantages of the Federal Credit Unions are explored as follows:

Advantages of Credit Unions

  • More than just a member: Once you are a member of a credit union, you’re not just a customer but also a member and part-owner of the organization. In addition to getting unparalleled customer services you get the voting right and also have a say in the operation of the credit unions.
  • Higher interest rates: Members get lower rates on loans with enticing interest rates on deposit accounts. The average interest rate on annual deposit in a credit union is 0.49% as compared to 0.39% at national banks.
  • Lower fee structures: Credit unions are not-for-profit therefore they get tax breaks owing to which they offer higher interest rates than commercial banks. Credit Unions thus offer savings to investors.
  • Customer service: Credit unions offer unmatched customer service and they cater to small, big and medium sized organizations.
  • Community is priority: Members of a common community own and run the credit unions therefore the community is held in high esteem.

Disadvantages of Credit Unions

  • Mandatory to be a member: In order to be able to soak in the advantages of the credit unions and what they offer, one must become a member first.
  • Limited branch locations and ATMs: Credit Union is a small community based centre hence the number of branches or ATMs are limited too.
  • Insurance: Not all credit unions are insured. Some of them may be insured by the NCUA. Hence, if you deposit in an uninsured credit union, your money is at stake if the credit union fails.
  • Less tech savvy and fewer options: Credit unions have tried their best to match the services expected of a bank. For high value commercial mortgage loans, the city credit unions may not be the right option. Owing to lack of finances, the credit unions may not have the money to fund innovative technologies. Tech Savvy investors looking for innovative banking aps may be in for some disappointment.

For investors looking at higher interest rates, ATM fee reimbursements, Credit Unions are the still the best bet. Credit unions do not have to generate profits therefore they can operate on thinner margins. If you wish to reach decision making executives, the validated federal credit union email list from Confaab is ideal. The list is collated from reliable global sources and verified to ensure higher deliverables.

Make wise investment decisions by weighing the pros and cons. If you wish to roll out b2b campaigns, invest in the databases today!


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