Credit Union vs. Bank: Which One is Better for my Money?
October 25, 2022
Membership in credit unions is growing. According to S&P Global Market Intelligence, 5.2 million new members were added in 2021, a more than four percent increase over 2020.
What’s driving such growth? To some degree, some big banks have been their own worst enemies, whether charging unpopular fees, offering unfavorable terms on loans or savings accounts, or generating headlines for unscrupulous and sometimes illegal behavior.
Many people are discovering credit unions to be a more wallet-, conscience-, and customer-friendly alternative.
What are credit unions?
Credit unions are not-for-profit financial services “cooperative” organizations. That means they are owned and operated by their members.
Today, more than 5,200 credit unions are in operation in the U.S., serving more than 130 million members. Credit unions excel in two primary areas: rates and customer service.
- Rates. Because of their non-profit structure, credit unions tend to operate conservatively. (They largely avoided the sub-prime problems that so many big banks got wrapped up in during the Great Financial Crisis of 2008.) As a result, many credit unions are able to pay higher interest rates on savings accounts than banks while charging lower rates on loans.
- Customer service. In several surveys, credit unions have scored especially high marks for customer service, outscoring banks on questions related to the courtesy and helpfulness of their staff, call center satisfaction, and more.
Some credit unions offer additional benefits, such as member discounts on auto and life insurance. While credit unions typically have fewer branches and ATMs than big banks, some, including CCCU, belong to Co-Op Network, which gives members access to more than 30,000 surcharge-free ATMs and over 5,600 shared branches across the U.S. and Canada. Plus, with mobile banking, you can make deposits anywhere anytime.
Are credit unions safe?
Two organizations insure money saved at credit unions. The National Credit Union Administration (NCUA) insures savings in federal and most state-chartered credit unions with a fund backed by the full faith and credit of the United States government. NCUA guarantees deposits up to $250,000 per individual account holder, or $250,000 per person for joint accounts. The other organization, American Share Insurance (ASI), provides private insurance, covering up to $250,000 for each account held by a member of an ASI-insured credit union. Accounts at CCCU are insured by ASI.
Who is eligible to join?
While a growing number of credit unions are catering to the public at large, membership is still largely targeted toward employees of certain companies or educational institutions, members of community associations, or people who live or work in certain areas. CCCU offers membership to people who are affiliated with a Christian church, school, or ministry.
At a time when many people are interested an alternative to the big banks, credit unions are meeting a need. And for those who also want to align their financial choices with their faith, Christian Community Credit Union is uniquely able to address both needs.
Matt Bell is the author of Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management. He speaks at churches and conferences throughout the country and writes the MattAboutMoney blog.
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.
