If you are looking for an institution to open a new checking account, a savings account or a credit line, you have several options, two of the most common ones being traditional banks and credit unions. While the range of the services provided by the two types of organizations includes certain types of financial products that are common for both, there are several important differences between the two institution types – here are some that you should know about before choosing one over the other.
One of the most important differences between banks and credit unions is their approach to profit. Banks are either privately owned or publicly traded, which means that they are for-profit organizations, businesses that focus on making a profit, rather than on the individual needs of their account holders, and that usually charge higher rates and more fees than credit unions. Credit unions, on the hand, are set up as cooperatives, which means that they are owned by their members. Credit unions in Colorado Springs confirm that membership in a credit union is usually based on a feature shared by the members, such as being part of the same community or age group or working in the same industry segment, and the unions themselves are focused on providing the best solutions for the needs of their members, with lower rates and fewer fees than in the case of banks.
The Benefits of Choosing a Bank
While the low rates and the convenient fees make credit unions very attractive at first sight, there are fields in which banks surpass credit unions. Here are some:
- Availability to everyone – anyone can open an account with conventional banks, bank accounts are not reserved for people who share a particular affiliation;
- Comfort – conventional banks usually have a more extended infrastructure, with more branches and ATMs than credit unions, which makes them easier and more comfortable to use;
- Financial technology – banks usually invest some of their profit into developing technological solutions and IT infrastructure, such as mobile banking solutions. Developing such features is a long and expensive process, therefore credit unions rarely use cutting edge technology, banks being superior in terms of the available IT features;
- Product range – conventional banks usually offer a much wider range of services and products than credit unions.
The Benefits of Credit Unions
All credit unions, including credit unions in Colorado Springs, offer some unique perks – here is what to expect:
- Excellent customer service – credit unions focus on their members’ needs, therefore they excel when it comes to customer service, offering personal attention, guidance when it comes to understanding financial solutions;
- Periodic earnings – credit unions being not-for-profit organizations, they redistribute any profit that they make to their members, either in the form of dividends or in the form of earnings on their deposits;
- Easier to use – most credit unions don’t have minimum balance requirements, their ATM fees and the deposits they require when opening an account are lower, just like their overdraft limits;
- More favorable loan conditions – the interest rates offered by credit unions are usually considerably lower than the rates offered by banks.