Comforts such as bank deposits and online banking are fantastic, but how much do they really cost you? Your bank statement may not show these costs directly. However, there’s an age-old saying- ‘You’re a product and not a customer if you’re not paying for a particular service.’ In such a case, big banks and lending corporations use slick financial jargon to reel you into taking out a loan or use other borrowing services.
On the flip side, if you’re fed up with being treated like a product rather than a customer, trust us, you’re not alone in this. In fact, in 2018 alone, around two million people between the ages of eighteen and thirty-five joined credit unions. In addition, fifty-four percent of credit union members are under 50, while twenty-eight percent are under thirty-five.
That said, what is a credit union? It is a member-owned financial cooperative, developed and managed by the members themselves. CUs are non-profit organizations that exist solely to serve their members. Like banks, a credit union provides the same services, including loans, deposits, etc. However, as a member-owned entity, a credit union is safer to borrow money from than your average bank. How is that so? Listed below are five reasons that answer this question.
Better personal experiences
Here’s one thing you should do. Call your bank right now with a simple request to check your savings account balance. Then, count the number of times you have to press various digits on your phone to go through different sub-menus before you can actually talk to a real person. We’ll wait!
Banks and other financial organizations tend to have a bad reputation because of cumbersome customer service. Trying to get information on auto loans and credit repair services means staying on hold for extended periods. A credit union, on the other hand, provides customers with easy-to-use services. Not to mention, the interaction will always be more human. Instead of navigating through recordings, there will always be a person on the other side of the phone to answer your questions and help you understand the complicated finance world. For instance, Irish credit unions are known for their high-quality customer experience. In fact, according to the national CX insight study, Irish CUs are rated as the best.
Better lending practices
Banks often have to answer to their owners. And these owners expect a stable and predictable return on their investments. Such a demand from corporate often puts a straitjacket on lending practices and restricts deviation from a standardized formula. Take your income, multiply it by your credit score, and divide it by two- the amount you get will be the interest rate a bank will charge you!
However, let’s imagine you recently got a new job. In that case, last years’ tax returns won’t indicate how much you earn. It won’t matter because it’s not in the formula. Did an old medical bill ruin your credit history? If yes, then a corporate bank or lending service will not consider your loan application. In simple terms, interest rates tend to be higher when borrowing from a bank. Plus, there is little to no room for flexibility.
But a credit union is a community-centered financial organization. So, helping the people of the community is what it does. UCs have lower interest rates, and they tend to accommodate when looking at a person’s financial details and history instead of following the commercial lending formula.
Availability of online services
About a decade ago, only banks and other corporate lenders could afford online banking services to their customers. However, now even a kid can learn how to code today. The internet is dominating today’s world, and credit unions have also jumped on the bandwagon. They provide routine services including, checking account balances, paying utility bills, and direct deposits. Plus, most credit unions have an online loan inquiry service. You can also apply for a loan directly through their website.
Not to mention, credit unions now also partner with services such as Square and PayPal, making it a whole lot easier to receive and send money online.so if your excuse to avid CUs is that they’re not tech-savvy, you’re mistaken!
Transparent and straightforward loans
Unlike a traditional lender such as a bank, credit unions rarely carry any administration fees or add hidden charges to the loan cost. The credit costs which you agree to when signing the loan agreement will always be final! Unless you want to change your loan terms down the line, of course. Plus, the loan officer will never shy away from going through every tiny detail of the loan agreement with you. They’ll always be ready to go through the fine print and explain any financial terms you might not understand.
Unlike traditional lenders such as banks, credit union loans are ethical. What does that mean? Well, credit unions don’t exploit people who require financial aid, nor do they exist to make profits. After all, you own the credit union and are borrowing other members’/owners’ money. Your ability to repay the loan will be crucial here.
The loan officer will look at your outgoings and income and suggest terms and conditions that suit you best. They will never ask you to apply for a loan that might lead to financial stress or unnecessary debt in the future. On the other hand, banks and other corporate lenders live on people’s debt. They want people to go into debt so they can make a sweet profit! If your moral compass sways, you might want to consider these factors.
Credit unions offer various types of loans. A dream wedding, a new car, healthcare, home improvements, business expansion are all possible. This article listed a few reasons why you should opt for CUs instead of corporate loans. In the end, you have to ensure that you commit to repaying the loan you’re acquiring. If you don’t, you will dig a debt hole so deep that you’ll have trouble finding your way out of it.