You might know one or two ways your credit union can save you money, but there are actually 5 important ways we help members keep more cash in their wallets. Here's how:
1. Lower Interest Rates on Loans
Credit unions are member-owned, meaning that they're financially responsible to their members. Their members get lower interest rates on loans, thereby saving money.
On the other hand, banks are owned by shareholder investors, so they have a responsibility to provide these shareholders with good returns on their investments. This is partly accomplished by charging bank customers higher interest rates on loan products than a credit union typically charges members.
2. Higher Interest Rates on Deposits
As with charging lower interest rates on loans, credit unions typically pay higher interest rates on deposits, which helps our members earn more money than they would at a bank.
For example, at Hanscom Federal Credit Union, our CU Thrive automated savings account encourages members to save with a rate of return that's surprisingly high...2.00% APY1 at the time of this writing!
Even our checking accounts help our members save. With the free Kasasa Cash Back checking account, our members can earn 2% cash back on debit card purchases, earning up to $84 cash back per year ($7 per month)2. Many banks have monthly maintenance charges more than double this on their checking accounts.
3. Lower Fees
There are monthly maintenance fees, excessive transaction fees, minimum balance fees, early account closing fees, paper statement fees, debit card transaction fees, ATM fees...the list goes on. Unless you've got significant account holdings, banks can eat up your savings with what feels like an endless menu of fees. If you've got limited income or savings, having fees deducted from your accounts can turn into a financial disaster.
Credit unions, however, tend to charge fewer fees and when they do, they're not as draconian. Moreover, members have more choices to avoid fees in the first place, such as choosing a free checking account over a checking account that charges a maintenance fee when a minimum balance isn't met. (It's worth adding here that the balance minimums in these credit union accounts also tend to be much less than balance minimums required in accounts held at banks.)
4. Works With Less-Than-Stellar Credit
Step into a bank with skimpy credit or a rough patch in your credit history, you're likely to walk out of there later disappointed that you can't get a car loan or qualify for a mortgage. Banks aren't in the business of helping these customers; their goal is to make as much money for shareholders as they can, and they view someone with a limited credit history or a low credit score as an investment risk.
Credit unions take a different view. Of course we want our members to have robust credit histories with high credit scores so we can give them the best rates. But we also understand and are more likely to invest in members who want to turn their financial lives around, whether they're looking to buy their first car or home, or just get out from under a mantle of debt once and for all.
We understand that bad things happen to good people, that their debt can be turned around, and that we can give these members a leg up when others are pulling the ladders away.
What this means for a member is that they can avoid paying exorbitant interest rates through places like payday lenders or car title loan shops. We're even willing to rewrite a loan when a credit score improves, thereby saving our member more money on interest.
Which brings us to...
5. Invests in Building Member Wealth Through Financial Education
It is one of the credit union's cooperative principles to provide financial education and training for its members. Financial literacy is a cornerstone of building a strong membership base. When our members are financially fit, our organization is financially fit.
This is why we offer free financial webinars, credit score and report reviews...even this blog and our social media platforms are designed to help our members become better educated about their money. When our members know things like how credit scores are computed and why they need to have a will, they will make better, smarter financial decisions that end up benefitting themselves as well as their fellow credit union members.
Others are reading:
- How to Save Money When Buying Your First Car
- Why Emergency Funds Are No Longer Optional
- Why You Should Check Your Checking Balances Frequently
- Use Your Credit Card as a Budgeting Tool
- Age-by-Age Guide to Saving for Retirement
1APY = Annual Percentage Yield. No minimum balance requirements apply to this account. Rates for a CU Thrive Account are fixed for the full term (12 months) with a maximum contribution amount of $500 per month. You may schedule transfers up to $500.00 (minimum $5.00 ) each month from a Hanscom FCU checking account. This account will not automatically renew at maturity. There can only be one CU Thrive account open per membership. Please refer to the Disclosure for Personal Accounts for more information. Early withdrawal penalties may apply to certificates. Fees may reduce earnings and the principal amount may be reduced to cover the penalty. You can also visit any branch location or call us at 800-656-4328 for details.
2Kasasa Cash Back: Qualifying accounts earn 2.00% cash back on all debit card purchases that post and settle during each Monthly Qualification Cycle that your account qualifies, up to a total of $7.00 cash back per Monthly Qualification Cycle. “Monthly Qualification Cycle” means a period beginning one (1) day prior to the first day of the current statement cycle through one (1) day prior to the close of the current statement cycle. “Statement Cycle” means the period of time for which Hanscom FCU provides a summary of the financial activities and transactions that post and settle to the accountholder’s account. Rewards are subject to change and may change after account is opened.