Are you looking for financial institutions that with favorable terms which also meet your requirements? Specifically, you’re interested in anyone who will help you save money, increase savings, and charges no or nominal fees. It sounds like you’re talking about a credit union, or specifically about South Houston Credit Union.
At a time when most financial institutions are milking profits, you need someone to be on your side and to think about what’s best for you and your family. In principle, credit unions exist for the sole purpose of helping the community. Whether it’s based on employment, location, or any other form of association, members bond together to serve each other.
Differences between banks and credit union
Both organizations offer a variety of financial services, such as financing loans, CDs, providing checking and savings accounts, and credit cards. But they are unique in the ways that they operate. At the top of the list, banks are enterprises focussed on making a profit, and credit unions believe in the “people helping people” philosophy. As a non-profit institution, credit unions offer comparatively lower interest rates on loans and credit cards and higher returns on savings and CDs than banks.
Another critical distinction between the two is that banks are owned and operated by shareholders. Conversely, credit unions are cooperatives, meaning the members control it. Your initial deposit makes you a partial owner of your credit union. You have a say in their plans and decisions.
Why are credit unions better than the banks?
Once you become a member of a credit union, you’ll discover that they have a lot to offer.
Credit unions have lower fees than banks. Because credit unions are nonprofit organizations, they have fewer overheads. As a result, many can offer services free of costs, such as checks, withdrawals, and electronic transactions. Similarly, they have policies to encourage savings and assist people with limited means. They may also offer to check accounts that require insignificant minimum balances or one without monthly service charges. Even when credit unions do charge for penalties such as a bounced check or an overdraft, the fees are typically less than that incurred through a bank.
Lower interest rates on borrowing
As mentioned above, credit unions promote the ideology of saving. They’re dedicated to providing members of the community a chance to a better lifestyle. Hence they offer services and products at lower interest rates than what you would get at a bank. Getting an auto loan, credit card, or mortgage can be a whole lot cheaper.
Credit unions tend to pay higher interest rates on deposit accounts than commercial banks. A penny saved today is worth two tomorrow. They provide incentives by giving back profits to savers in the form of bonus dividends.
Customer focused services
A bank comprises of shareholders working towards earning a profit. But credit unions don’t focus on this goal. As a nonprofit enterprise, it can reduce overhead costs in exchange for customer satisfaction.
In a credit union, all members are equally important. And since all members must have an account to be in the cooperative, decisions and plans are made considering everyone’s opinions. The aim is to work together to serve each other. Main objectives such as lower interest rates for borrowers, higher return on savings, better customer service, and nominal fees are highlighted. Some credit unions even provide a variety of free products. And since every person is looking out for each other, fewer risks are taken.
Gone are the days that people avoided credit unions due to limited locations. As cooperation among cooperatives is increasing, many unions facilitate other union members to use their services and ATMs. Even though banks have multiple branches locally and nationally, credit unions are not too far behind. However, one aspect is considerably different. A credit union operates on a smaller scale than a bank. It provides faster and more personal services. And since a credit union adheres to membership policies, you develop working relationships that last decades, almost as if they’re part of the family. Representatives continue to provide services to the extended family, promoting loyalty and trust.
Since credit unions know you on a more personal level, they are more flexible with rules and regulations to accommodate your needs. Hence, they will be more understanding if you need a loan, especially when you encounter unexpected circumstances.
On the other hand, a bank is a large financial institution that processes thousands of applications in a month. Knowing you personally and understanding your troubles may appear farfetched. And to top it off, if you have a blemished credit history, unemployed, or don’t have a substantial deposit, most banks will deny you a loan or credit card. In hindsight, it’s hardly their fault because applications are streamlined. They are processed and verified by predetermined standards based on income, credit scores, and deposits. If you don’t meet these requirements, your application will most likely be rejected.
Most credit unions provide services that are with easy-to-follow rules. Most are free, or close to it. The minimum balance is usually a small amount and maintaining the account is rather straightforward.
With most traditional banks, many services are coined “free” but have many restrictions and clauses mentioned in the fine print. And if these requirements are not fulfilled, either there is a penalty or charge. The minimum balance is also more than what unions set.
At the end of the day, where you decide to go for financial issues comes down to personal preference. But if you’re looking for small dividends, discounted loan rates, and free or low-fee basic accounts, then credit unions are ideal for you. They’re perfect for those who need to pay bills, deposit paychecks, and make debit/credit card payments.