Credit unions certainly have fewer locations and are less common than banks. That doesn't mean that they offer services of a lower quality, though. Consider the advantages offered by credit unions to understand what differences there are between them and traditional banks.
1. Who owns a credit union? A group of investors are the owners of a bank, and as such they are responsible for decisions regarding business policies and administration. These same choices affect the ability of the investors to make money from the investments they have made in the bank. Conversely, credit unions are owned by their members and the decision making board members are volunteers that give of their time on behalf of other members. Still, each member of the credit union can vote on the policy that is to be followed since it will affect their money.
2. Do they keep your money safe? Any money being stored in a bank is guaranteed to be there by the Federal Deposit Insurance Corporation (FDIC) and this guarantee is displayed at each and every bank. Credit Unions follow a similar process and are 100% secure, but the Credit Union National Association (CUNA) is the organization backing them up.
3. Who can become members? A financial institution like a bank or credit union can offer their services to anyone who meets the criteria they set for perspective members. Banks do whatever they can to get as many people as possible highly interested in doing their banking with them. This process helps banks build an ever growing customer base, but the people who sign up for accounts do not always decide to stay with the bank.
Credit unions, however, cannot be joined without first meeting some sort of prerequisite for becoming a customer. These can include factors like religion, workplace, geography, and civic affiliation. By keeping the total number of members low, credit unions can provide better, more personalized customer service.
4. Are they friendly? Banks do what they can to attract new customers, but their real loyalty belongs to the investors in charge of the bank's care. This is why their customer service often waxes at the time you open new account but wanes quickly.
Customers of credit unions are also making the business decisions for the company, so the customer service is traditionally better. To keep future interest rates on credit cards and loans low, money that exceeds the running costs of a credit union is used to maintain interest rates on money market accounts, savings accounts, and CD's as high as possible.
Offering unsurpassable customer relations skills and interest rates that are just plain better, credit unions are a notable threat to banks. Banks, however, have more money supporting them and are therefore able to offer bigger and better incentives to their customers. Deciding whether to store you money at a bank or credit union involves making an informed decision that relates to your personal situation.
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