Credit Unions are becoming a popular choice for people considering obtaining loans. Why shouldn’t it be? These unions offer one of the lowest rates on credit cards, fewer account fees, higher interest rates on saving accounts, and ensure the overall financial growth of its members.
Are you still unsure about getting your next loan from a credit union? Read our blog to learn about the five guaranteed ways a credit union can help you save money.
1. Lower Fees Help You Save Extra
While banks may appear more credible and a feasible choice for getting a loan, they have many drawbacks. First, banks won’t provide you with loans quickly without hassle. Additionally, banks also charge various other fees such as minimum balance charges, expenses for over transactions, bounced checks, early account closure, statement printing, debit card transactions, etc. That means banks can drain your finances through unjustified charges, leaving you stressed and anxious, especially if your account has a low balance.
That is where credit unions come in to solve your problems. With credit unions, there is no minimum balance requirement. Plus, they have a modest fee for other banking services, and account holders can avoid upfront costs. For example- credit unions charge nothing on a failed check.
2. Higher Interest Rates on Deposits
Credit unions typically pay higher interest rates on deposits than banks. This allows members to earn more money than banks. At the same time, credit unions also charge low-interest rates on loans allowing you to save more.
3. Credit Unions Offer Dividends To Members
The amount you earn from the funds in your bank account (savings, money market, or other interest-bearing accounts) over a year is called your annual percentage yield (APY). Banks usually yield lower APY than credit unions due to higher fees and the sales-first approach. According to NCUA statistics, a credit union’s 5-year stock certificate typically earns an interest rate 13% higher than a bank’s equivalent 5-year CD. Putting money in a credit union increases your chances of making money.
4. Incentives And Rewards
Many credit unions opt to reward their members with incentives and cashback. These unions can easily compete with banks by providing rewards specific to your financial needs. For example, your union may host various contests and incentive programs regularly.
Many credit unions provide cash incentives on credit card offers. Members are rewarded for credit card usage each time and are offered annual bonuses on the total earned cashback. Some credit unions also provide the following services.
- Low-cost student loans.
- Scholarship opportunities.
- Funds for college expenses to help eligible members avail of various financial benefits.
5. Provide Support to its Members
Credit unions are nonprofit cooperatives that are administered by client members. They are formed on a community feeling and work on the “people come first” principle. Credit Unions generally give back by donating their earnings to charitable groups and causes and funding local projects. They believe in supporting the community and working for the welfare of the communities they are associated with – churches, hospitals, etc. When you join a credit union, you are required to pay a small fee upfront that goes as a donation to the organization.
Credit Unions do not have a sales-first approach and work for the financial betterment of their members. When you take a loan from a credit union, you are not just getting access to loan services but many other advisory services and benefits. Credit unions make a perfect choice if you have a budget constraint and want to yield maximum profits from a loan.