Credit Unions vs. Banks

We've gotten a few questions from readers asking about credit unions and how they compare to traditional banks. I personally don't have any accounts with a credit union, probably because I've been so marketed to by major banks that I never thought to approach one. I've heard some credit union customers say the interest rates they get from their credit unions are lower than other places, and some say they are comparable or even higher. Nonetheless, it seems like credit unions deserve a closer look. I asked Paul Brucker from Alliant Credit Union to share his expertise on the subject. Here's what Paul had to say:

"A bank is a for-profit business owned by shareholder investors. A measure of a bank’s success is how much profit it makes from its customers and distributes to its shareholders. To maximize profits, banks pay lower rates on deposits, charge higher rates on loans, and assess more and higher fees. Credit unions operate on a totally different principle.

For one thing, when you join a credit union, you’re not a customer – you’re a member and an owner. Credit unions are not-for-profit organizations owned and operated for the benefit of their members. In a credit union, all income after expenses and capital reserves is distributed to its members. In fact, a credit union’s mission is to maximize the returns to its members through high savings dividends, low loan rates and low fees.

In short, while banks take money from their customers, credit unions, like Alliant, make money for their members."

Sounds good to me. What do you think? Do you prefer a credit union over a bank? 

About Alliant Credit Union: Alliant was founded in 1935, shortly after Franklin D. Roosevelt signed the Federal Credit Union Act into law. It serves more than 250,000 members and manages over $6.7 bilion in assets, making it the seventh largest credit union in the nation based on asset size. To learn more about Alliant, their rates, or to apply for membership, visit www.alliantcreditunion.org.