Credit Union Vs Bank: 8 Myths Debunked

Making informed decisions has never been more difficult. We live at a time when internet-driven misinformation clouds issues and perpetuates myths. This holds particularly true when trying to make an intelligent credit union vs bank choice. However, a fact-based deep dive shows that community members from all walks of life may be better served working with a local credit union.

8 Credit Union Vs Bank Myths Debunked

Myths and misinformation are a lot like a brush fire. Just when you think it’s finally extinguished, it reignites. Shining a spotlight on these credit union vs bank myths may not prevent disinformation from rearing its ugly head in the future. But it will help people make fiscally responsible decisions today.

1: Credit Unions Don’t Offer the Same Services as Banks

People who haven’t worked with a credit union are often persuaded by this myth. The conventional thinking is that there must be a difference between the two and fewer services than a wealthy bank makes sense. Nothing could be further from the truth.

Credit unions provide the same services as corporate banks. If you need a checking account, savings account, car loan, mortgage, HELOC, or low-rate credit card, a credit union offers these and other services. In fact, since credit unions are member owned they often offer even more services to their members such as youth centric financial guidance and account options for different age groups from  little children to young adults. Youth accounts are designed to educate and teach financial independence. Credit unions often also offer scholarships for our youth members.

2: Changing from a Traditional Bank to a Credit Union Will Be a Hassle

This myth has its roots in some truth, but it has been grossly exaggerated. The people who can become members of a credit union are usually restricted to a certain group. Some credit unions are designed to serve employees. Others cater to residents within a regional community. To join a credit union, you only need to check one of those boxes. After that, it’s just a matter of meeting a friendly customer service professional and filling out a form.  

3: Credit Unions Don’t Offer Reward Programs like Banks

It might be safe to say that credit unions may offer different rewards programs than a specific bank. The fact is that wide-reaching organizations offer rewards programs to attract new customers. Just think about how many retail outlets and gas station chains offer discounts and rewards cards. Credit unions offer credit card rewards programs that are tailored to their membership. If there is a credit union vs bank difference, it’s that the former typically saves people more money overall. Credit unions can also offer their members discounts and promotions that they are able to secure by partnering with other businesses allowing their members to reap the benefits.  

4: You Can’t Use Online Banking at a Credit Union

Credit unions make online baking easy for members to conduct online transactions. The mobile tools used by members are equal if not simpler than corporate banks. You can pay bills, review transactions, check balances, and make deposits from your smartphone.

5: Credit Unions are Just like Banks

Although credit unions and banks may offer many of the same services and benefits, there is an underlying difference. Banks are effectively owned by shareholders who invest their wealth with the expectation of turning a profit. Bank CEOs are compelled to generate these through fees and higher interest rates. The customers who take out accounts, loans, or use the institution’s credit cards are paying those pass-along profits.  

By contrast, a credit union is owned by its members. Rather than pay out quarterly dividends, credit unions offer low interest rates on loan products, credit cards, and eliminate unnecessary fees. That’s why credit unions are nothing like banks.  

6: Credit Unions Aren’t Very Tech-Savvy

It seems counterintuitive that a myth persists claiming credit unions are not tech-savvy. Even a cursory look at the mobile banking options and digital access indicates otherwise. Credit unions onboard technology experts to ensure they integrate emerging technologies that streamline the customer experience. They also maintain robust cybersecurity to protect members’ information. We hear a lot about big banks getting hacked. Credit unions, not so much.

7: Credit Unions Don’t Offer Financial Advice

A growing number of credit unions have expanded their services to include financial advice in recent years. Part of the reason for this added value was to compete on equal footing with large banks. The other was to provide members with the best services possible.

A relatively recent phenomenon, called the “Great Resignation,” has been something of a boon for credit union members. Financial advisors have stepped away from corporate jobs to embrace a better quality of life. Many of these experts are offering financial advice to families through credit unions. Not only are credit unions offering financial advice to members, but they are also attracting highly talented people.

8: Credit Unions Are Only for People That Have No Credit

Because credit unions operate under a mandate to provide low-interest lending and financial services to members, loan professionals enjoy greater approval flexibility. This means work history, bill-paying consistency, and other factors may be considered alongside a person’s FICO score. This can be to the advantage of people with borderline credit histories.

Credit unions can also help people build a robust FICO score through secured credit cards and other opportunities. But the most important thing to keep in mind is that credit unions are in a position to offer low rates on car loans, mortgages, and other borrowing options. Regardless of your credit history or score, working with a credit union opens doors to money-saving opportunities.

Experience the Benefits of a Credit Union with Members Plus

When you are looking into a financial institution, you want an organization that supports local business, charitable organizations, your local community — and most importantly, you! Make your next best financial decision today and apply for membership to a member owned, community proud credit union. At Members Plus Credit Union, we pride ourselves in providing guidance and services not just for our current members, but for our youth as well knowing they are the future of our community. If you have questions contact us today!