4 Commonly-Held Beliefs About Credit Unions — That Aren’t Actually True
When you’re looking for a new place to park money and cash checks, it’s tempting to just pop into the nearest bank and open an account.
Not so fast, my friend.
You might want to give credit unions a look because they’re a great alternative to standard banking options.
I was a diehard bank customer since opening my first checking account before heading off to college. I stayed with that big-name bank for years, even when my husband tried convincing me to switch to the credit union where he works.
The differences between credit unions and banks aren’t always super obvious, so I really didn’t know all that much about them. What little I did know wasn’t compelling enough to make me want to bother moving my account somewhere new for no reason.
4 Myths About Credit Unions -- Busted
Then one day I’d had enough of my bank and how thoroughly it lacked decent customer service. I began investigating whether a credit union was a solid alternative to regular banks.
That’s when the myths I believed about credit unions were soundly busted. I opened a checking and savings account with a regional credit union down here in Florida.
And I never looked back.
Myth #1: “I’ll never be able to find a free credit union ATM.”
I’ll admit that having an account with one of the biggest banks in the nation gave me access to more ATMs than I could ever use in my lifetime. At first I was skeptical that credit unions could match how easy it was to get cash whenever I needed it.
I was soon floored to discover that most credit union customers are also never far from a surcharge-free ATM.
Several large credit unions are connected through the CO-OP network to provide customers with access to over 30,000 ATMs nationwide. For context, that’s more ATM locations than most banks offer. A lot more.
My credit union even lets me access ATMs inside 7-Eleven stores for free. That’s pretty handy when I need my Slurpee fix.
Myth #2: “Banks have better consumer technology than credit unions.”
As the owner of a freelance business, I get a fair number of paper checks. I don’t know about you, but I’ve got better things to do than wait in line to deposit my checks.
On the other hand, I don’t want to let them stack up until I have enough to make a trip to the bank worth my time.
Whoever invented the technology that allows customers to make deposits simply by snapping of picture of it with a smartphone has my eternal gratitude. It’s life-changing for people too lazy to go to a branch location for routine transactions (though I prefer to think of myself as “operationally efficient”).
Credit unions feel our pain. Most offer banking apps that allow you to check your balance, make deposits, transfer funds and even chat with customer service agents right from your phone.
Myth #3: “Credit unions only want customers with high bank balances.”
Nope, not true.
“Credit unions offer services to lower-income members at prices that are very attractive,” explains Mike Schenk, from the Economics & Statistics Department at the Credit Union National Association. “In fact, credit unions sometimes charge their lower-income members less for a service than banks charge even their higher-income customers.”
To be honest, I doubt my credit union makes much, if any, money by having me as a customer. I don’t have super-high account balances, I don’t have any lines of credit open with them and I don’t even pay any monthly service fees as long as I have two direct deposits a month.
In fact, since it’s paying me 1% interest on my checking account balance per month (and a little less on my savings account), it’s probably losing money on me.
Nevertheless, my credit union still treats me like a valued customer whenever I talk to a customer service agent.
Myth #4: “You have to belong to a union or military branch to join a credit union.”
Again, nope. This used to be true a long time ago when credit unions restricted membership to certain groups or industries.
Thanks to the loosening of federal regulations over the years, just about anyone is eligible to join a credit union for a small, one-time fee -- usually around $5.
Membership has its privileges. Unlike bank customers, credit union members can shape the direction of the organization. As a voting member, you help elect the Board of Directors and can even show up at public meetings to offer input and opinions.
My credit union takes benefits a step further. It offers discounts on everything from satellite television service to home security systems. It even provides access to a free budgeting app so I can hoard my pennies responsibly.
Credit unions are insured by the National Credit Union Share Insurance Fund, the same type of regulatory agency as the Federal Deposit Insurance Corporation, which oversees banks.
I know my money is safe and I get some pretty sweet perks, so joining a credit union was a no-brainer.
I only wish I’d done it sooner.
Your turn: Are you a credit union member? What’s your favorite benefit?
Lisa McGreevy is a staff writer at The Penny Hoarder. She loves her credit union but feels guilty she hasn’t attended a board meeting yet. Maybe next month.