Q:

What are the advantages of choosing a credit union over a bank?

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Quick Answer

Credit unions generally offer higher interest rates on deposits, charge lower interest rates on loans and assess fewer customer fees than banks, making it advantageous to choose a credit union over a bank. As not-for-profit institutions, owned and overseen by their members, credit unions tend to place a greater focus on customer service and are committed to redirecting earnings to their customers. Credit unions also invest in the financial literacy of their members through the provision of various educational resources.

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At least one national survey found higher satisfaction scores in all categories and an overall satisfaction rating higher than the industry average among credit union customers than those doing business with commercial banks, notes Business Insider.

While membership awards the credit union member a say in how the credit union is managed, membership typically requires meeting certain eligibility markers, such as living in a certain geographic area or working in a certain industry, and it may not be available to everyone. Higher interest rates on deposits and lower interest rates on loans often also mean fewer rewards, such as cash back on credit card purchases, than offered by banks. While not true for all credit unions, many tend to be less sophisticated in terms of technology, which means that mobile applications and online banking services are not always available or as user-friendly as those provided by banks.

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