Like a bank, a credit union offers financial and money management services. However, there is a key difference between these two institutions. A credit union is a non-profit business owned by its members, and one of its main aims is to help them. At their core, credit unions are dedicated to helping the community.
Rather than keeping them as profits, a credit union’s proceeds are used to provide special benefits and services for its members. These include low-interest loans, high-yield savings accounts, financial counseling services and more.
Read on to learn about the unique benefits and services that you may get by joining a credit union.
Personal Credit Repair Help
It is all too easy to slip over the line from good credit into a less desirable credit rating. Fortunately, one of the major advantages of credit unions is that they provide members with free credit repair services.
Within most credit unions, you will find at least one credit expert who can offer consumer credit counselling services. This is an excellent way to understand the basics of repairing your credit and develop a plan to put this knowledge into action.
One of the best ways to understand your credit score is to look over your credit report. Fortunately, many credit unions’ credit counselling service will provide you with a free credit report. This will allow you to visualize your financial situation and come up with strategies for how to improve it.
Your free credit score check is invaluable in achieving a credit boost. In turn, this will help you when it comes to obtaining credit in the future: for example, when you are looking to take out a mortgage or credit card.
Since a credit union is member-owned and dedicated to helping the community, it makes sense for the establishment as a whole to ensure all of its members have good credit scores. Offering these services allows members to take out loans or other forms of credit that help them grow financially.
Additionally, a credit union may help you if you are just starting out using credit and need to build your credit profile.
Better Loan Terms
It is widely accepted that credit unions offer some of the best terms for loans and credit cards. This perk is one of the many advantages of a credit union that draw people in. Where an average bank might charge somewhere in the region of 6 percent for a car loan, the credit union auto loan rates sit substantially lower at 2-3 percent. This means that, over the duration of the loan term, you end up paying much less and saving more of your money.
For credit cards, your bank might charge around 15 percent in interest on all purchases (after any 0 percent initial offer has expired). However, the credit union average credit card fee comes in closer to 11 percent, making it preferable for borrowers.
In addition to conventional loans and credit cards, a credit union can give you access to personal loans and refinancing options. You may also tap into your home equity with an equity loan.
Credit unions may even give loans to members with bad credit as a way of helping them to improve their score. If you need to start building credit, credit unions can give you a secured credit card or a credit-builder loan with a low interest rate and easy qualification requirements.
Help With Debt
Since credit unions work to help members of the community, one of the best benefits they offer is debt counselling. Alongside the credit counselling that you can get at your credit union, you will also be able to develop a debt management plan.
In order to qualify for this help, you will typically be required to have an active checking account with the credit union, which will normally require a minimum balance. However, the minimum balance is usually very low. And when compared to banks, credit unions do not charge high fees for low-balance accounts.
Additionally, credit unions provide consumer loans that have low interest rates. This is great news if you are looking to consolidate your debts into a new low-interest loan that you can repay in an affordable and manageable way.
Depending on your credit union, you may even be able to get debt and credit help services online or over the phone.
High Savings Account Rates
Opening a savings account is one of the best ways to take advantage of the benefits of a credit union.
Most credit union savings accounts offer a much higher interest rate when compared to savings accounts at a bank. Furthermore, you may get a yearly dividend paid into your account. In some cases, you are required to have a minimum balance to take advantage of this perk.
People may be under the impression that savings accounts with a credit union may not be as secure as those with a regular bank. However, you can rest assured that the level of security is just as good. Moreover, there usually are not any restrictions on when and how you can access your money.
How to Join a Credit Union
First, you should look for a credit union that you are eligible to join. Some credit unions may require you to belong to a certain group of employees, a particular union or a family. However, there are plenty of credit unions that do not have these kinds of requirements.
Once you have found some credit unions you are eligible to join, make sure to find out which one offers the best types of services you need. Not all credit unions will have the same perks. If you are looking for debt help or a savings account with a good interest rate, be sure to confirm the credit union offers programs you like.
When you find a suitable credit union, ask for an application. Once you are accepted, you may need to pay a small $5 – 25 fee and open an account to get started.