Why did you choose your financial institution? Many older readers may have decided through careful consideration of their options. But many young people haven’t given this question much thought.
When parents open their child’s first bank account, it usually makes sense to do it at whatever financial institution they already use in order to tie the child’s account to theirs. If you were one of these children, you may have continued to use this account without a second thought. But, as you start to take control of your finances, it’s worth asking yourself: “Is this the best financial institution for me?”
One thing to consider is the difference between a bank and a credit union. Credit unions differ from banks in many ways, but ultimately those differences come together to create a better experience for you.
Let’s start with the business model. Credit unions are not-for-profit organizations, with the profit being invested back into the credit union resulting in generally lower rates. The main goal of a bank, on the other hand, is to create profit for shareholders. At the end of the day, a credit union will work for you, while a bank will work for shareholders.
As a customer of a bank, you don’t get any say in the bank’s operations. At a credit union, however, having an account gives you a say in determining the path forward. For this reason, users of credit unions are referred to as members instead of customers. Each member gets one vote, and the members collectively decide the direction of the credit union. The credit union is not owned privately by shareholders, but collectively by all members.
Credit unions are generally much smaller than banks, and you might assume this will result in a worse experience for you. This is not the case. Many credit unions, including Neighbors, participate in the Co-op Shared Branches network, enabling members to conduct ATM transitions at any participating credit union. So, you get all the perks of a credit union being local while still having the nationwide ATM access and peace of mind that comes with the big banks.
Another misconception about credit unions is that, due to their lack of size relative to banks, they are less secure. The National Credit Union Administration insures up to $250k in each credit union account, the same amount of the FDIC insures for banks. Credit unions also utilize the same best practices when it comes to securing your personal information, whether it’s in-branch or online banking services.
No matter which way you slice it, you have a lot to gain by switching to a credit union. Since the primary purpose of a credit union is to benefit its members, a credit union will always do a better job at that than a bank whose purpose is to make money for shareholders.
If you want to see what a difference a credit union can make, open an account at Neighbors today!