Why choose a Credit Union rather than a Bank?
As a 35+ year credit union member and employee, I can’t imagine banking with anyone but a credit union. Helping members reach their financial goals has been extremely rewarding to me and to the various credit union teams I have led over my career. Guiding members to find the right financial products and services that will benefit them both immediately and over the long term is not only the philosophy of a credit union, but our daily practice at Mission Fed. A guiding principle of our work at Mission Fed is to build strong relationships with our members and earn their trust by providing sound financial recommendations.
Choosing Between a Credit Union and a Bank
Credit unions offer many of the same services as traditional banks. Like banks, credit unions accept deposits for Checking Accounts and Savings Accounts and offer Auto Loans, Mortgage Loans, Credit Cards and other financial services with all of the modern conveniences that you would come to expect, such as Online Banking and Mobile Banking. However, the question of credit union versus a bank comes down to the quality of these services—and that is where credit unions set themselves apart.
The Difference Between a Credit Union and a Bank
While the menu of financial services is often similar between a credit union and a bank, you’ll find that rates at credit unions are often more member-friendly than they are at traditional banks. This is because unlike banks, credit unions return surplus income to their members in the form of dividends, better interest rates, additional products and services and more branch locations.
At Mission Fed, we pride ourselves on giving personal attention to each of our members. Credit unions are not-for-profit financial cooperatives that exist to serve their members, while banks strive to maximize corporate profits. When you open a Checking Account or Savings Account with a credit union, you become a shareholder, or as we at Mission Fed say, a “member-owner.”
As a member-owner, you have certain privileges beyond those of an account holder at a bank. This is apparent in the way credit unions are run. Credit union members elect a volunteer Board of Directors who establishes the credit union’s policies. Being democratically operated by its members through the Board of Directors allows each credit union account holder an equal say in how the credit union is operated, regardless of how much they have deposited at the credit union. Banks, meanwhile, appoint a Board of Directors to be responsible to both the shareholders of the bank, and the account holders.
Another big difference between a credit union and a bank is the connection to the local community. You’ll often hear that credit unions make a significant impact not only on their members, but on the community at large. Mission Fed strives to enrich the San Diego community with programs like Mission for Our Schools and Mission for Nonprofits, as well as dozens of outreach events and partnerships with many local nonprofits and educational partners.
Advantages of a Credit Union
A common concern that some people have is that credit unions may not be as financially strong or federally insured like banks are. However, this couldn’t be further from the truth. In fact, credit unions are often more financially secure than banks, providing as strong (or stronger) insurance coverage.
Credit unions began to be insured in 1970. To this date, credit unions nationwide have been able to successfully fund themselves and have not spent any taxpayer money to pay out insurance claims. The “financially strong” banks can’t say the same.
The majority of credit unions, including Mission Fed, are insured by the National Credit Union Administration (NCUA) Share Insurance Fund, backed by the full faith and credit of the United States government. In 2008, the government increased the maximum share insurance coverage to $250,000. Accounts in excess of $250,000 are often fully insured if properly structured.
Banking with a Credit Union
Often, credit unions focus on engaging with customers who need access to affordable financial services. Some credit unions focus primarily on providing financial services at reasonable rates in areas that are underserved or unserved by banks. At Mission Fed, if you live, work or go to school in San Diego County, you’re welcome to bank with us.
So, why choose a credit union? Banking with a credit union offers many benefits, from lower fees and better loan rates, to higher dividend rates on deposits and more personal, individually focused service.
From my decades of experience with credit unions both as a member and as an employee, I have seen firsthand the way a credit union benefits its members. I encourage you to join a credit union and take advantage of the many benefits and services they provide to help you achieve your financial goals, or as we call them, Mission Fed Moments!
Want to learn more? Below is an infographic comparing and contrasting banks with credit unions.
The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article by Mission Federal Credit Union is for the information and convenience of its readers and does not constitute endorsement, control or warranty by Mission Federal Credit Union.