When looking into the benefits of a credit union, it is important to know what the purpose of a credit union is. “Credit unions are cooperative financial institutions owned and operated by their members – not shareholders. That means most credit unions offer better deposit accounts and better loan rates.” (1) There are multiple benefits that members have access to when joining a credit union that can help them achieve their financial goals.
Two things that make credit unions stand apart is their business structure and their tax-exempt status. These two things allow credit unions to offer lower fees or even no fees to their members, as well as checking accounts with no minimum balance and no monthly services charges. (2) “Credit unions are able to reinvest their earnings back into their members, decreasing the need to charge fees such as overdraft penalties.” (1) Transfer fees and overdraft fees are also lower with credit unions making it easier to save money. (3)
According to the 2021 National Credit Union Association report, credit unions can offer the best interest rates on their certificate of deposits and savings accounts. (4)
Credit unions offer higher rates on savings accounts which results in better savings for account holders. Credit unions also offer several types of accounts that allow their members to save as much as possible. These accounts include:
The common goal of all credit unions is to help their members save money. They pass on the savings that they receive by offering things such as low interest rates to members. This enables members to save more money while they work towards paying off a loan. “As of March 2021, the average APR for a three-year federal credit union loan is 8.86%, while banks charge 9.98%, according to data from the National Credit Union Administration.” (6)
In 1998, as part of the findings of the Credit Union Membership Access Act, Congress found that:
Credit unions, unlike many other participants in the financial services market, are exempt from Federal and most State taxes because they are member owned, democratically operated, not for profit organizations, generally managed by a volunteer Board of Directors, and because they have the specified mission of meeting the credit and savings needs of consumers, especially persons of modest means. (7)
This means that credit unions can invest this money back into their members by offering special benefits that other financial institutions do not. Fees, interest rates, and loans can vary – but with a credit union, you will be able to reach your financial goals.