If you’ve gotten fed up with the high fees and impersonal service of banks, don’t despair. There is still hope for your checkbook. I’d like to introduce you to the (drumroll please) all new, never before seen… Credit Union. Now you may be asking yourself how your grandfather’s Credit Union can compare to modern banking today? After all, you have your automatic bill pay set up, your debit/credit cards, and a ridiculously low interest rate on your savings. What more could a person ask for? According to Credit Unions of the 21st century- Lots! Some of the advantages of joining a credit union include it’s not for profit status, member centered focus, higher yields on savings, lower fees, and democratically elected officials.
Credit Unions are Not-for-profit
With the entire banking industry still recovering from its self-induced economic meltdown, many may be wondering how credit unions can compete with big banks, investment companies, and other financial institutions. The simple answer is two-fold. First, credit unions operate fairly conservatively which gives them more leeway when the economic winds shift in unfavorable directions. Second and perhaps most importantly, is their not-for-profit status. This grants credit unions favorable tax treatment resulting in lower operating costs. In addition, credit unions only “profit” enough to keep the company stable and safe. This is a direct transfer from their pockets, back to the customers.
And there-in lies the beauty of it all. Credit unions, being member owned, are controlled by the customers. When every customer has an equal say in who will run the company, and directly votes on the boards that dictate policy, service quickly becomes a very important issue. This is one of the main reasons credit unions are known today as much more customer focused than their commercial counterparts. They exist completely for the customer and that culture permeates everything they do. Also, whereas banks exist solely for the business of handling money, most credit unions generally see themselves as community oriented and offer scholarships, business development training, and financial advice for those transitioning through lifes stages.
So what exactly does all this mean in dollars and cents? For starters it means an average of a 63% increase when comparing a 5 year bank CD to a 5 Year credit union CD. 63%! That is a big deal! Plus, in a day when most banks charge for checking account services, credit unions continue providing those services for free. This is one of the reasons banks score on average between 70 and 80 on ACSI’s customer satisfaction scale and credit unions generally average between 80-95. In fact, according to ACSI, “…the industry remains best-in-class for financial services and displays the top customer satisfaction benchmark among all service categories covered”.
While credit unions are not new to the financial world, they are growing rapidly, and reached record high membership in 2012. Most offer the same suite of services and products as traditional banking institutions, including online bill pay, mobile apps, checking and saving account services, and online account management. If you’re in the 10-20% of people who are switching banks every year, take a second look at your neighborhood credit union. What you find might just surprise you.
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Pyramid Federal Credit Union is a Tucson credit union that provides all types of banking services to all members that work or live in Pima County AZ.