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What are the advantages of a credit union?

Credit Union Vs. Bank
October 07, 2020

By Katie Levene

Where you bank matters. You invest time and hard work into every dollar you earn. You don’t want to waste your money on fees or high loan rates, you want to see it protected and growing.

Credit unions understand these needs better than big banks. They cater to their members with lower fees, better rates, and good customer service. Credit unions also embrace online banking in full force while remaining secure. Let’s take a closer look at the benefits of a credit union.

Credit union advantages

There are many advantages to a credit union that you should consider before picking your next place to park your money.

  1. Credit unions answer to their members, not stockholders.
  2. Credit unions typically have lower fees.
  3. Credit unions have competitive rates.
  4. Credit unions have a large ATM network.
  5. Credit unions are active in their communities.

Credit unions don’t have customers, they have members

The most obvious difference between a bank and a credit union is that credit unions answer to their members. They don’t answer to stockholders. Your membership represents a share of ownership.

Anyone who has an account at a credit union, whether it’s a car loan or checking, must be a member. Usually, membership is represented by a “share” in a savings account. For example, every member at Alliant has $5 in a savings account that represents their membership.

Credit unions take pride in serving their members’ best interests. Because their members come first, credit unions focus on empowering members through digital and customer service, as well as financial education. When they’re efficient, credit unions also can pass their savings onto their members. For example, Alliant operates economically by focusing on digital banking channels and investing in digital technology improvements.

Banking with credit unions typically means lower fees

Banking and investment fees are irritating.  Since banks are in the business of making money from their customers, you may find fees on your account for silly things like a low balance in your checking account. Credit unions may charge you fees on certain transactions like overdrafts but in general, they limit their fees.

If you want to avoid high fees, try looking into credit unions because credit unions are not-for-profit organizations. Fees are typically lower and there are fewer of them. Compare rates and fees, especially on loans such as mortgages or car loans.

Another advantage of a credit union: it may have better rates

Everyone wants their money to earn more money. Credit unions help you achieve this because of their great rates. Every dollar you invest in a credit union is reinvested in you. Therefore, credit unions have higher deposit rates and lower loan rates.

You’ll notice that credit union savings and checking accounts are usually high-rate accounts that earn you an interest rate higher than the bank industry average. Certificates, which act similarly to certificates of deposits at banks, will also provide great rates.

When it comes to interest rates on loans, you will find competitive pricing. Again, compare rates and you may be pleasantly surprised. Credit unions offer student, car, home equity, mortgage, personal, and business loans.

Mobile banking and ATMs bring banking to you

Alliant Credit Union is no longer restricted to a local region. It is available nationwide, thanks to digital banking. Credit unions, in general, have fewer branches than traditional banks. However, the combined credit union ATM network is larger than any bank’s ATM network.

As banking becomes more mobile, the need to use a physical teller is diminishing. You may need to use an ATM every so often, so credit unions partner with other credit unions to create a network of ATMs. (Alliant also offers ATM fee rebates, up to $20 per month for members with a checking account.)

Banking is no longer restricted to a building. It is with you everywhere you go.

Credit unions are active in their communities

Again, credit unions are member-oriented. Members come first, which means members’ communities also come first. For example, the Alliant Credit Union Foundation sponsors educational programs to teach financial literacy. The Foundation also invests in local community organizations and provides grants to a variety of charities. 

Misconceptions about credit unions

Membership qualifications: To be part of a credit union, you need to be eligible for membership. This could be through your employer, an organization or a family member that belongs to an organization. For example, current or retired members of the armed forces and their families are eligible for membership at Navy Federal Credit Union.

Many people believe that they do not qualify for membership but there are many ways to qualify for membership. At Alliant, you can support Foster Care to Success with a donation that Alliant will contribute on your behalf. As a supporting member of an organization that helps foster kids, you can become a member of Alliant Credit Union. We call that a win-win.

Insured deposits: Banks and credit unions accounts are insured for the same amount of money, $250,000. The difference is the branch of the government that insures your deposits. Credit unions are insured by the National Credit Union Administration or NCUA.

Loans and deposit accounts: A common misconception is that credit unions do not offer as many competitive products as banks. It simply isn’t true. Credit unions can help you with your next mortgage, car loan, credit card, certificate of deposit and more financial services. Rates are typically better than the big banks, making a credit union account a financial win for you.

Non-profit vs. not-for-profit: Even some experts get this wrong. Credit unions are not-for-profits, not non-profits. Credit unions reinvest their profits in their members and the services they provide.

Summary of credit union benefits

When you join a credit union, you aren’t just an account number. You’re joining a not-for-profit financial cooperative where all of the members are owners. Alliant Credit Union benefits include higher savings rates, lower loan rates and convenient digital services.

Learn even more about the differences between banks vs. credit unions.


Katie Levene is a marketer fascinated with finance. Whether the topic is about the psychology of money, investment strategies or simply how to spend better, Katie enjoys diving in and sharing all the details with family, friends and Money Mentor readers. Money management needs to be simplified and Katie hopes she accomplishes that for our readers. The saying goes, "Knowledge is Power", and she hopes you feel empowered after reading Money Mentor

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