MADISON, Wis. (4/24/14)--Highlighting their many distinct advantages over banks, SmartAsset.com, a blog dedicated to providing information on all things financial, published a post Tuesday titled "4 Reasons to Make the Switch to a Credit Union."
While many banks are inflating fees to offset losses associated with the economic slowdown, the blog post's author, Rebecca Lake, wrote that more U.S. consumers have turned to credit unions to fulfill their financial needs (SmartAsset.com April 22).
Lake suggests several reasons why those who might be looking for a new place to manage their finances should consider a credit union.
First, Lake says, credit unions often charge fewer fees.
"Big banks and small banks alike are based on a corporate structure, with shareholders receiving a sizable slice of the pie," Lake said. "Credit unions, on the other hand, are considered to be member-owned, which means they're not responsible to shareholders.
As a result, any profits are passed on to members in the form of lower fees."
Typically, monthly maintenance, overdraft and minimum balances fees will be lower at a credit union, she added.
Next, Lake cites better interest rates as a reason to make the switch to a credit union. The best deal on interest rates for products such as mortgages, car loans or lines of credit are likely found at credit unions, once again thanks to the not-for-profit structure.
"The average rate for a three-year car loan in September was 2.78% for credit unions vs. 4.18% for banks," Lake said, quoting numbers from the National Credit Union Administration.
Lake also points to the ease of dealing with a credit union when trying to secure a loan, especially compared with big banks. Credit unions tend to be more flexible when making loan decisions, she said, and member-owned institutions are more likely to consider the larger financial picture rather than focusing on a single factor.
Finally, Lake discusses the benefits of the personalized service offered at credit unions, citing this as one of the most appealing aspects of switching to the member-owned institutions.
Said Lake: "The bigger the bank, the easier it is to get lost in the shuffle, but credit unions pride themselves on the quality of customer service they provide."