You’ve probably heard all the “big banks are bad; switch to a credit union” hype, but do you know why credit unions are better for consumers? In light of the second annual Bank Transfer Day coming up, let’s review the differences between banks and credit unions and why you should switch.
Banks are for profit.
Banks are not working for you; they’re working for profit. Customers (and their money) are merely a means to the end. You may notice that banks generally have higher fees, because they want to maximize profits for their shareholders.
Credit unions are not-for-profit financial cooperatives.
What is a “cooperative” or “co-op”? A cooperative starts when a bunch of like-minded people get together to solve a common problem that isn’t being met by traditional businesses. Co-ops often look like any other business, but they are owned by the people who use their products and services and exist for the sole reason of serving their members, usually resulting in better rates and lower fees.
Credit union myths busted
Myth: “If I switch to a credit union, I’ll be inconvenienced by fewer branches and ATMs.”
One benefit of banking with a credit union is shared branching. Shared branching allows you to visit other credit unions to make deposits and withdrawals, loan payments, transfers, and any other transactions as if you were at a branch of your own credit union.
If your credit union is part of CO-OP Network (most Seattle credit unions are, including Seattle Metropolitan Credit Union), you have access to over 28,000 surcharge-free ATMs in the country. You can use the CO-OP Network’s ATM Locator Tool to find the surcharge-free ATM nearest you, which is likely at a credit union or a 7-Eleven store.
Myth: “My money is safer with a bank than a credit union.”
Most credit unions and banks offer the same level of protection. The only difference is in who insures the accounts. Bank accounts are insured by the FDIC, while credit union accounts are insured by the NCUA.* The FDIC and NCUA are both backed by the full faith and credit of the United States government, and they both insure accounts up to $250,000.
*A very small number of financial institutions are not FDIC or NCUA insured, so be sure to check before you sign up.
Myth: “Credit unions aren’t big enough to meet all of my needs.”
Credit unions may be local, but that doesn’t mean they don’t offer as many services as the big guys. Whether you need a mortgage, investment services, an auto loan, or a business account, there are many credit unions that can meet all of your needs, including your need to feel like a valued member, not just a number.
The credit union difference
Credit unions help boost our local economy. Many offer no-fee checking and savings accounts, because everyone deserves a safe place to keep their money. They believe that financial education should be free and widely available, and that membership should be open to all without discrimination based on gender, race, religion, or sexual orientation. They let members have a voice in organizational decisions. To credit unions, giving back to the community is a priority.
Take part in Bank Transfer Day
If you are frustrated with your bank, switch to Seattle Metropolitan Credit Union to start enjoying the freedom of owning your own money. You can open an SMCU account online or at any of our branches. If you open a Feel Good Checking account (which has no monthly fees or minimum-balance requirement), we’ll donate $20 to one of our non-profit community partners.
Learn more about becoming an SMCU member here.
Post a comment below telling us why you decided to leave your bank or how being an SMCU member has made a difference for you. We’d love to hear your story.