Credit unions are finance institutions that essentially do almost all what banks do. Through a credit union you can get access to a savings, a checking or amoney markets account, as well as access to a personal or a car loan, a mortgage or a home equity loan. However, these credit unions are often much smaller institutions designed to serve small communities of people.
The process of choosing a credit union is somewhat similar to that of choosing a bank basically because you are always looking out for the financial institution that will offer you the best service, at the best rate and most importantly ensure your money stays safe.
Here are the pros and cons of a credit union.
#1 They are primarily not for profit institutions
Credit unions are primarily not for profit meaning their loyalty lies with the members who are the primary owners. This means that their services will always be structured for maximum benefit to the members. The disadvantage with this is that since they are not for profit, shareholders are not likely to get much value from their shares in the company in comparison similar shares in other profit making institutions.
#2 They are more flexible
In comparison to other financial institutions such as banks, credit unions are much more flexible in terms of their assessments before granting loans to customers. They are also more human in the way they handle customer bank accounts. This is owing to the fact that customers are actually shareholders. The only challenge with this is that credit unions often expose themselves to risks of default on payment by members because of leniency when doing credit checks.
#3 Branch and ATM locations are limited
Due to their small size, credit unions have a smaller branch and ATM network and this means they are only available in limited locations. This becomes an inconvenience especially if you need to access cash quick. However, some credit unions have solved this by incorporating an online portal that enables its members to carryout banking services from anywhere provided there is internet connectivity.
These may be referred to as cons but in actual sense, they do not affect your bottom line. The financial services you get from credit unions are much more beneficial and friendlier as compared to other financial institutions. What we mean is, these are not really cons in our opinion.
Let us know what you think about this piece.
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