So, what’s all the hubbub about credit unions? Well, they’re pretty cool. They offer virtually all the same stuff a bank will, plus an additional smile when you enter your local branch. So, what really sets them apart?
The first thing to consider is how they handle people with less than stellar credit who are applying for loans. A credit union will look at your credit score, yes. They will even look at who you owe money to and see if you’re making your payments when required. But just because you have a lower score, they won’t automatically say no. Credit unions are not-for-profit institutions, which means they have a tax-exempt status, making them less concerned about bringing in coinage. This means they have more leeway with who they give loans to, e.g., those who are considered riskier borrowers.
The second thing is their lower fees. You can typically qualify for free checking just by having direct deposit orenrolling in e-statements. Other fees, on average, are also lower than those charged by banks.
The third thing are the low rates. It was noted earlier that credit unions are not-for-profit entities. This differs from the for-profit structure of a bank. Be it a mortgage, car loan, or credit card, credit unions typically offer better rates than banks. Why?
An article from The Nest puts it this way; “Unlike banks, credit unions are structured as member-owned cooperatives or non-profit corporations. This means they reinvest all of their funds back into their consumer programs and they’re exempt from state and local taxes. When you consider that the federal tax rate for corporations is 21 percent, it’s not hard to understand how credit unions can charge lower rates.”
Credit unions can work with less than perfect credit and offer lower fees and rates than banks. A final benefit is the behavior of the staff. The people working at credit unions actually seem like they care about getting you the best possible deal. Why? Because they actually do.