Myth vs. Fact: Everything You Need to Know About Credit Unions
If you don’t immediately think of convenience, customer satisfaction, and savings, then you might want to take a second look at all that credit unions have to offer. Don’t worry, you’re not alone—the public perception of credit unions is often marked by misconceptions and incorrect information. Though credit unions have traditionally been exclusive and niche, the system has evolved to offer greater accessibility and a wider scope of resources.
To help do so, we’re busting some common myths—and highlighting some important truths about credit unions. Because who wouldn’t want to make sure their money’s in good hands?
Read on to find out how credit unions are helping spread the philosophy of #MoreMoneyLessProblems:
“Credit unions have more than 100 years of history in the US.”
Fact.You heard that right: credit unions have been serving members in the United States for more than 100 years—but the history of these institutions dates back even further. Financial cooperatives first began popping up in the beginning of the 19th century in England, and then were further established and developed a few decades later in Germany.
In the US, these institutions first emerged as a vehicle to offer affordable interest rates and loans to the working class, especially farmers or others chasing the “American Dream”—in stark contrast to loan sharks and big banks, which often gouged society’s most vulnerable citizens.
The first official credit union was opened in the US in 1909, and was so successful that it inspired many more openings throughout the 1920s—each offering more and more Americans access to inexpensive credit that, in turn, helped to stimulate the booming economy. Even 100 years later, credit unions continue to offer affordable options for loans, checking accounts, and financial services—a philosophy that we can all get behind.
Myth.Traditionally, credit unions have only been offered to those working for a particular employer—most commonly, the federal government. But credit union membership has since been opened up to a variety of different demographics, including those who live in a specific geographic location, have family members in the credit union, or belong to a group such as a church, school, or labor union. For example, anyone who lives, works, worships, or attends school in Cincinnati, Ohio—specifically, Hamilton County in Ohio and Boone, Kenton, and Campbell counties in Kentucky—is eligible to become a member of Cinfed Credit Union. Credit unions believe that everyone deserves access to the perks of membership.
“Credit unions offer lower fees, lower interest rates, and higher deposit interest rates.”
Fact.In general, credit unions tend to offer lower fees, lower loan rates, and higher deposit interest rates due to their status as not-for-profits, all adding up to higher savings rates and, at the end of the day, more money in their members’ pockets—AKA, winning. Compared to big banks, credit unions generally charge less in fees, require lower minimum deposits, and provide better interest rates on credit cards and loans.
This difference between banks and credit unions is most obvious in car loan interest rates, where a June 2014 study by SNL Financial found that car loan interest rates were between 44 percent and 48 percent lower through credit unions compared to big banks.
This is especially true for members of Cinfed Credit Union, where auto loan rates run as low as 2.49 percent APR—a shockingly low rate of interest (in all the best ways). The bottom line? Credit unions take less and give more—and when it comes to money, that’s as good as it gets.
Myth.Many hold the misconception that credit union branches and ATMs are more difficult to access than those of big banks, making these institutions less convenient; however, that’s simply not the case. Cinfed Credit Union has more than 100 access points between branches, shared branches and surcharge-free ATMs across Cincinnati, (not to mention online and mobile access) – ensuring that you’re never far from one of their many locations. Additionally, Cinfed Credit Union offers up to $20 in ATM fee reimbursements per month with Kasasa checking accounts—permanently eliminating the anxiety that comes with having to press “accept” on high surcharges.
“Most credit unions offer free checking accounts.”
Fact.According to Bankrate’s 2016 Credit Union survey, 76 percent of credit unions offer free checking—more than twice the rate of free checking at big banks. Even more importantly, each year fewer banks offer free checking, while more credit unions offer this feature to their members. Additionally, 22 percent of the remaining credit unions waive fees for members meeting certain requirements—making it incredibly easy to avoid fees as a credit union member. Cinfed Credit Union has many checking account options that offer no monthly fees and free debit cards. That’s what we like to call a free-for-all.
“Credit unions don’t offer car loans or mortgages.”
Myth.In fact, credit unions offer a range of loans, including those for vehicles and mortgages, each with rates either comparable to or competitive with those of big banks. Cinfed Credit Union offers low-APR-rate vehicle and mortgage loans as well as commercial and home equity loans. General loans are also offered in types including K-12 tuition, motorcycles, and boats. Whatever type of loan you need, you can not only get it at a credit union, you can get it at a credit union for less.
“Credit unions are not-for-profit institutions.”
Fact.Though credit unions have evolved in terms of accessibility and services, they have always remained true to their roots as not-for-profit institutions. Instead of focusing on maximizing income brought in, credit unions are focused on serving their members as credit cooperatives with a “members helping members” philosophy, and feature a volunteer board of directors that are elected by the credit union members. Since credit unions work tirelessly to benefit their members, they are especially interested in increasing savings, and do so by returning earnings to their members in the form of lower loan rates, lower fees, and higher deposit interest rates.
“Banks tend to offer excellent service.”
Myth.In fact, members of credit unions are typically more satisfied with service than bank customers. Since credit unions exist to act in their members’ best interest, their employees are focused on making the banking experience as user-friendly, enjoyable, and beneficial as possible. It pays off; as Bankrate notes, a CFI Group American Customer Satisfaction Index Survey found that credit union members rated their overall satisfaction at an average score of 87 out of 100—8 points higher than the banking average.
What are you waiting for? If you’re ready for a better financial solution, then it’s time to check out what Cinfed Credit Union has to offer. (Spoiler alert: it includes convenience, excellent service, and lots of savings).