Back in January 2014 there was much debate about whether or not credit unions were a better choice than banks. But how much has changed since then, and is there still a divide about who you should trust your money to? Let’s revisit the credit union versus bank debate now, and see what is relevant in today’s society.
The three main areas of interest back in early 2014 were interest rates, fees and the business models of the credit unions versus the banks. On the whole, it appears that credit unions offered lower interest rates on loans and higher interest rates on savings. They also had lower fees, though these were rising. The CUs won another victory in the credit union versus bank debate with regards to the way that they are ran, offering a much more community-focused structure. So how did the banks get a look-in? Well, they offered a more flexible choice, as some felt restrained by the credit unions’ location restrictions. Also, the difference between the banks’ fees and the CUs’ fees was getting smaller and smaller, due to the rise in the latter’s recent charge increases.
After less than two years after this head-to-head was last discussed here, it is interesting to see what differences have come to the fore, and what areas have remained the same in the credit union versus bank debate. According to Credio, the most important aspects when choosing a bank are customer service and the variety of accounts on offer. Other important factors include:
- Website satisfaction
- Savings fees
- Branch locations
- ATM locations
- Mobile App satisfaction
A lot of these factors can be used to see how the relationship has changed as we revisit the credit unions versus banks debate.
The Importance of Customer Service
It appears that credit unions still have the upper hand here, as people feel a stronger connection to these than to the banks. As one customer puts it:
“Navy Federal [Credit Union] does an amazing job of helping out its members, especially during sequestration last year.”
It appears that there is still the looming doubt over the trustworthiness of banks, as the image of greedy, profiteering owners combats the friendlier shareholders of the credit unions, all working together for the greater good.
It appears that credit unions have managed to knock one of their issues on the head since we last looked at this issue too. In the past many were concerned about the location restrictions which limited their use of a CU. However, there are credit unions that offer membership regardless of location, and shared banking also helps to eliminate this concern for many too.
However, there are many areas in the credit unions versus bank debate where the banks come out on top. Some customers have noted a more flexible outlook from the banks, offering longer opening hours, including weekends in some cases, and better websites and mobile apps.
Customer service plays such an important role when deciding who we should trust with our money. After all, we need to know that our hard-earned wages and carefully-planned savings are being looked after in our best interests, and we want to know that those in charge of the coffers have the transparency to allow us to see their inner dealings. When revisiting the credit union versus bank debate after any period of time, our human need for stability and understanding will always come high up on the list of priorities.
Financial Factors to Consider
Moving away from the human aspect of CUs and banks, when revisiting the credit union versus bank debate it appears that a lot of the earlier trends have continued. Although credit unions on the whole still offer higher interest rates on savings there is a minimal difference at times – maybe not enough to convince someone to take the trouble to switch from their bank. (The National Credit Union Administration has details of the differing rates online.) Although some credit unions offer 3% on their checking accounts there are a lot of prerequisites needed before you can actually get this rate. As with any account, it’s a case of checking through the small print first. For example, banks often calculate their interest on a daily basis, whereas a credit union may do this monthly. Depending on the way you use your account, this could prove important when choosing between the two.
The Conclusion of this Debate
It seems that there is still no clear winner in the credit union versus bank debate. Although it would seem natural to look at the financial advantages as a starting point, our human nature means that we look at other factors first to decide which the best option for us is. For that reason, there cannot be a clear cut winner, as some base their decision on loyalty, others on convenience and others again on a combination of factors.