Benefits of using federal credit unions include higher return rates on savings accounts, lower interest rates for loans and more of a personal touch with bankers since credit unions are smaller, according to U.S. News & World Report. A consumer may not realize he can join a federal credit union.
A credit union is able to offer lower interest rates and higher rates on savings accounts because it transfers its non-profit savings on to members, states Bankrate. A member may find it preferable to transfer his high credit card balance to a credit union to take advantage of the low interest rates. One downside to lower interest rates is that credit unions usually don't offer cash back or other rewards like those available from credit card companies and banks.
Credit unions may offer better service than banks since credit unions are owned by members, notes Bankrate. One hurdle to joining a credit union is that a consumer has to be a member of a specific religious affiliation, association, employee group or residential area.
Just like traditional banks, credit unions are insured, according to U.S. News. The federal National Credit Union Administration insures credit union deposits for as much as $250,000. Credit union members can use the National Credit Union Administration to check on current insurance coverage.