While it’s no longer prudent to keep your life savings under your mattress or stashed around the house, heading straight to a major bank might not be the best option, either.
Credit unions — nonprofit organizations that offer a variety of financial services to members — are a popular alternative to traditional banks.
According to statistics from the Credit Union National Association, 3.7 million people joined a credit union in 2015 to reach a record high of total members (101 million). And according to the American Customer Satisfaction Index (ACSI) 2015 survey from CFI Group — an independent organization that surveys 70,000 U.S. consumers every year — credit union members are generally more satisfied with their service than customers of major banks.
The survey looks at 10 different indicators, including the variety of available services, the competitiveness of interest rates, the number of branches and ATMs available, and various customer service factors.
“An analysis of industry customer experience benchmarks for banks shows smaller usually means better service. For nearly every benchmark, scores improve as the bank category gets smaller,” the ACSI survey says.
In the 2015 survey, credit unions scored an 81 overall, out of a possible 100. National banks (like Chase, Bank of America and Wells Fargo) scored 72; “super regional” banks (such as PNC, Fifth Third and Regions) scored 76; and regional and community banks scored 80.
The survey indicates scores for credit unions have fallen in recent years as membership increases.
“Compared with a year ago, members find most aspects of their credit union experience to be less satisfying. Nevertheless, credit unions earn superior benchmarks compared with national banks or super regional banks in all but two areas. Like smaller regional and community banks, credit unions — with their more localized nature — are at a disadvantage when it comes to the number and location of branches (70) and ATMs (72).”
And some of the benefits offered to credit union members come with some trade-offs, so it really is up to each individual consumer to determine their personal priorities when choosing a financial institution. Here are some of the perks of being a credit union member:
- More competitive interest rates. Because credit unions are nonprofit, they can often offer lower interest rates on loans to members and higher interest rates on savings accounts. On the flipside, rewards programs might not be as robust as with traditional banks.
- Profit sharing. Credit unions share profits with members through regular dividends.
- Fewer strings. Annual fees, minimum account balances and other caveats that come with checking and savings account are generally less strict at credit unions than at traditional banks. The tradeoff is fewer bells and whistles; credit unions might be slower to adopt the latest tech updates, like mobile apps.
- Shared ATMs and branches. Credit unions don’t usually offer as many branch and ATM locations as traditional banks, but a co-op network among credit unions lets members of one credit union use services at another credit union. For example, a member of Forum Credit Union could use an Indiana Members Credit Union ATM without fees. There are also credit union service centers that act as hubs for all credit unions involved in the co-op system.
