Should I Switch to a Credit Union?

One of the most common questions that I frequently get is “Should I switch to a credit union?” Many people wonder whether they should switch from a traditional bank to a credit union for their financial needs.

There is not really a perfect answer for every situation. In some cases, it would definitely be to your advantage to make the switch to a credit union. In other cases, it may not be in your best interest. Here are a few things to consider about whether you should make the jump to a credit union.

Check Your Eligibility

The first thing that I would look at is whether or not you can get involved in a credit union in your area. Credit unions are not quite as spread out as traditional banks. Many of them are confined to a small area because they are essentially a local business. In addition to that, many credit unions are also for only certain people.

For example, many big businesses have credit unions that are only accessible to their employees. If you work for a big company, then it is most likely going to be to your advantage to get involved with their credit union. If you live in an area that has a public credit union, you should inquire about getting involved with them.

Credit Unions are Nonprofit

One of the amazing things about credit unions is that they are nonprofit organizations. What this means is that they do not have to pay taxes to the federal government like banks do. Because of this, they can save quite a bit of money in operating expenses every year. When they can save thousands or millions of dollars in taxes, this means that they can pass these savings on to you in the form of lower interest rates and reduced fees.

Therefore, if you are ever shopping for a loan, you should definitely have a look at your local credit union. I never borrow money and less I have first checked with my credit union. While it may not seem like a huge savings, you can often save half of a percent or more off of what is out there in the market.

Credit Unions Have a Different Structure

One of the things that I like best about credit unions is in the way that they are set up. When you open an account with a credit union, you are technically going to be a partial owner in the credit union. This means that you are going to have a say in important matters regarding the credit union.

For example, if they are electing a new Board of Directors, you are going to get to vote on who gets in. This also means that you are going to get to share in the profits that are generated from the business. The money that they make off of loans and fees is going to be divided up among all of the owners. Periodically, you will see a credit in your checking account that represents your portion of the profits. It may not be much, but it definitely helps out.

Making the Switch

You need to look at your bank and determine if you are going to miss any of the features that you have. If not, you should check out a local credit union and see what they have to offer.