Choosing a financial institution to support an individual’s financial needs and goals is not always easy. With more than 10,000 credit unions and banks in the United States, selecting the best fit can be mind-boggling. Credit unions are often juxtaposed with banks, but both of these financial institutions are not the same thing. Credit unions like Memorial Hermann Credit Union are non-profit entities, but banks focus on making profits. This article highlights the key differences between credit unions and banks, making it easier for a person to determine the right solution.
Credit Union Offer Lower Interest Rates
When a person needs to borrow money to buy a home or vehicle, he will want to secure a low interest while qualifying for the loan. Usually, people find it difficult to afford loan payments due to high interest. Eligible Memorial Hermann Credit Union members can receive loans with lower rates, fees, and deposit requirements than banks.
Credit Unions Have Members and Banks and Customers
Credit union members are considered part-owners and have voting rights. Moreover, members need not pay any membership dues, attend mandatory meetings, or undertake supervisory responsibilities. Unlike bank customers participating in a simple transactional relationship, credit union members will be powerful enough to influence the institution’s future.
Credit Unions Share Profits with Members
Every financial institution cares about profit; what makes the difference is how those profits are used. A credit union is a not-for-profit cooperative institution that uses profits to reduce member borrowing costs. All members in credit unions will have access to low or no-fee checking accounts, loans at lower interest rates, and savings deposits paying a higher rate when compared to the banks.
Banks Don’t Share Profits with Customers
Now that banks are publicly traded or privately owned financial institutions, they consider sharing profits with investors rather than their customers. Moreover, for for-profit institutions, the rate of loan approval and interest paid on deposits is less generous than at credit unions.
Credit Unions are Community-Focused
In addition to caring about members, local credit unions also care about the communities they serve. Scholarship programs, charitable fundraising, and sponsorships are significant ways union credits focus on giving back to the community. Unlike credit unions, banks focus on earning profits and providing a lucrative return on their investors’ investments.
Credit Unions Offer Free Financial Education
Reputable credit unions like Memorial Hermann Credit Union care about people’s long-term financial success. These entities offer abundant educational resources to support the monetary goals of multiple individuals. Moreover, many credit unions provide free financial-themed seminars, online calculators, blogs, articles, and other resources to let people know how to improve their financial health.
After reviewing the above-listed points, it can be easily comprehended that credit unions and banks differ. While the former offers better rates for savings and lower rates for loans, the latter provides a variety of financial products. An individual can choose between these two financial institutions according to his priorities, i.e., interest rates, customer service, availability of ATMs, profit sharing, easy access to online banking, and more.