5 Reasons to Keep your Money at a Credit Union (2024)

FAQs

Why should I keep my money in a credit union? ›

Credit unions operate to promote the well-being of their members. Profits made by credit unions are returned back to members in the form of reduced fees, higher savings rates and lower loan rates.

Credit unions are financial co-operatives where members can save and lend to each other at fair rates of interest. They are non-profit organisations that have a volunteer ethos and community focus. You can become a member of a credit union if you have a common bond with other members.

Credit unions can be ideal for a low-interest loan, lower mortgage closing costs, or reduced fees, but you'll need to qualify for membership. Larger banks may offer you more choices regarding products, apps, and international or commercial products and services, and anyone can join.

Better interest rates: Credit unions typically offer higher interest rates on savings accounts because they have lower overhead costs than banks. Similarly, they offer lower interest rates on loans. Customer service: Credit unions pride themselves on offering better customer service than banks.

Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.

Credit Union Pros and Cons. The pros of credit unions include better interest rates than banks, while the cons include fewer branches and ATMs.

The future is unpredictable, and financial emergencies can crop up anytime. Saving money allows you to create a safety net for your future expenses as well as unplanned financial needs. The more you save, the more peace of mind you have, as you are better prepared for anything life throws at you.

Yes, it is good to save with a credit union as they generally offer better interest rates than those offered by banks. This can lead to higher growth of your savings and over the longer-term, as the interest compounds, you could see big differences in your balance as a result.

How do credit unions benefit society? ›

Credit unions provide loans and grants to small businesses and community development projects that may not qualify for traditional bank financing. These loans can help to create jobs, revitalize neighborhoods, and support economic growth in underserved areas.

"On average, credit unions pay higher interest rates on savings deposits than traditional banks. Credit unions are structured as non-profit institutions, allowing the reinvestment of profits back to members, including higher interest rates on high-yield savings and CDs," says Dr. Cherry.

But compared to banks, credit unions tend to be smaller, operate regionally and are not-for-profit. In many instances, they offer lower rates on loans, charge fewer fees and offer better interest rates for deposit accounts than traditional banks.

Credit unions aim to serve members by offering competitive products with better rates and fees than you see with a for-profit bank. Like a bank, credit unions charge interest and account fees, but they reinvest those profits back into the products it offers, whereas banks give these profits to its shareholders.

Whether you choose to stash your cash in a credit union or a bank, you can rest assured that your hard-earned money is protected. Both credit unions and banks are required to maintain a certain level of capital reserves to protect their depositors and ensure financial stability.

While the individual options may differ from one to the next, most credit unions offer custom loan programs designed to help borrowers establish credit for the first time or rebuild damaged credit. Some credit unions use aptly-named “credit builder loans” that function much like secured credit cards.

bank in a recession, the credit union is likely to fare a little better. Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money.