7 Benefits of Credit Unions
Are credit unions better than banks? There are many benefits of credit unions once you become a member. You may be asking yourself if it is time to make the switch. We’ve outlined 7 advantages of credit unions in this article to help you make your decision.
Credit Union vs Bank
When weighing the advantages of a credit union vs a bank, it is important to understand what a credit union is.
Credit unions are cooperative financial institutions owned and operated by their members — not shareholders. That means most credit unions offer higher interest deposit accounts and loans with better rates.
While belonging to a large financial institution has its advantages, there are just some benefits you won’t find anywhere but a credit union. Here are 7 benefits of credit unions that might make you think twice about getting an account with one of the big guys.
1. Lower Fees
Credit unions tend to offer lower fees than banks. This is because of their not-for-profit business structure and their tax-exempt status. Rather than paying shareholders, credit unions are able to reinvest their earnings back into their members, decreasing the need to charge fees such as overdraft penalties.
2. Better Savings
According to the National Credit Union Administration’s credit union and bank rates report for 2021, credit unions offer better interest rates than banks on their CDs and savings accounts. In the first quarter of 2021, the national average rate for a 5-year CD is 0.76 for credit unions, while the national average rate for banks is only 0.63.
3. Lower Loan Rates
In addition to offering better rates on savings accounts, credit unions are also known for offering lower interest rates on loans. Many credit unions offer all the products that banks do, from car loans to mortgages. However, credit unions are able to offer better rates on these same products because of their not-for-profit business model.
Check out California Coast’s auto loan rates, which are significantly lower than the national average rates for banks.
4. Local Experts
According to the Federal Credit Union Act enacted in 1934, credit unions provide membership to a specific population. A credit union’s field of membership could be a specific occupation or location. For example, we welcome anyone who lives or works in San Diego or Riverside counties to become a member at Cal Coast.
Credit unions often offer financial counseling led by local experts, like these free financial workshops available through Cal Coast. By offering workshops led by local business owners, credit unions can help provide more specific financial education for their members.
5. Commitment to Members
As nonprofit businesses, credit unions rely on their membership to continue operating, rather than being driven by profit. Members of credit unions enjoy the benefits of the organization’s strong focus on personalized customer service.
One of the ways credit unions can support their members is by giving back to the local community. For example, Cal Coast created a foundation to provide grants for teachers and scholarships for students in San Diego and Riverside Counties.
6. Elected Board of Directors
One of the benefits of being a member of a credit union is the ability to participate in the election of leadership in the organization. Naturally, this means that members can help guide the major financial decisions and corporate goals of their credit union.
7. Investments in Your Community
Credit unions make a commitment to investing in local communities. While national banks invest in large scale industrial projects, credit unions partner with local organizations to keep their earnings circulating within their communities. The goal is to improve the lives of the people in their membership base and add value to the community in which they operate.
Switching to a credit union has many benefits for both members and the community at large.
At Cal Coast, we’re committed to the credit union mission. As the longest serving financial institution in San Diego, we’re committed to serving the people of Southern California.
Learn more about the benefits beyond banking with membership at Cal Coast Credit Union.