For years, Americans have been unhappy with the big banking industry. With outrageous fees, large executive salaries and pushy sales people, consumers have been running away from these banks and towards smaller, friendlier credit unions.
Apart from all the anger directed at the industry, there are many valid reasons for switching from a big bank to a credit union. Whether you’re looking for top notch customer service, great rates on standard loans or higher return percentages on savings accounts, credit unions cater their business to people in local communities across the country.
1. Always Putting the Customer First
Consumers are become increasingly angry at big companies for providing poor customer service. To cut costs, big banks are now outsourcing their customer service departments to call centers in the Philippines and India, sacrificing both jobs at home and the level of service afforded to their consumers.
Big banks are required to do what’s in the best interest of their stockholders, which may not be in the best interest of the customers. If outsourcing customer service and reducing onsite banking staff increases the company’s bottom line, then executives will move forward with that decision.
Credit unions are owned by their members and not by stockholders, which means customers will always come first. They are more focused on providing excellent customer service and less focused on turning a profit, especially when it comes to attracting new members to the organization.
2. Less Stringent Loan Requirements
Even though the Great Recession ended over four years ago, banks are still holding customers to difficult and outrageous loan requirements. It often takes days to get approved and loan rates are much higher than the average consumer can afford.
Banks must follow a strict set of guidelines for every type of loan approval based on a complicated set of algorithms. For example, if an individual has little to no down payment for a car loan, they’ll likely be approved at a higher interest rate or for a shorter loan term. For mortgages, while banks offer pre approvals within minutes of applying, that pre approval might come with a significant amount of strings attached, or could be adjusted to a lower approval rate later on during the home buying process.
Members of credit unions enjoy no fee auto, home and personal loans, along with low interest rates that they can afford, according to Abri Credit Union. Credit unions are also able to approve certain types of auto or home loans with much less money down than traditional banks can. If a consumer’s credit score is less than satisfactory, credit unions are more likely to give them a second chance as well.
3. Friendly, Non-Corporate Structure
Banks, especially those that maintain locations nationwide, are held to strict corporate structures that make it hard for them to be customer centric. This is not only the case when it comes to customer service, but also when banking executives set loan restrictions, credit card approval restrictions, fee structures, and bank account minimum balance requirements.
As corporations, banks have an obligation to their shareholders. Credit unions, on the other hand, are controlled by their members and are structured as nonprofit organizations. The credit union does not have any obligation to return a hefty profit or increase the value of their stock.
More consumers are turning to credit unions for their banking needs because they can take advantage of low interest rates, great customer service, and little to no minimum bank account balances. No corporate structure means very low overhead and less taxes to pay to the government, a cost savings benefit that they pass on to their members.