When parents first teach their children about saving money, they often use piggy banks as a tool to drive the lesson home. Children drop their allowance in the piggy bank and, over time, grow to trust that it will protect their money so they can later buy everything from candy to toys.
Credit unions and community banks share a common spirit with those childhood piggy banks. Many people trust putting their money in these financial institutions because they feel like it will be safe.
A recent Harris Interactive poll, surveying more than 2,500 U.S. adults nationwide, revealed trust in these institutions has remained steady in recent years even as it has dwindled for larger banks. 49 percent of those surveyed reported their level of trust in credit unions or community banks had grown or remained consistent over the past few years. The same percentage of people reported their trust in larger national banks declined over the same period.
Trusting credit unions and community banks does not translate to doing business in all cases. Only 33 percent of the people surveyed in the Harris Poll reported they were credit union customers. 45 percent of those surveyed indicated they had an account with a national bank. The good news for credit unions and community banks, however, is that business is growing at a healthy and steady rate.
Credit unions reported a 2.9 percent increase in memberships from June 2013 to June 2014. This is nearly a full percent higher than the same period from 2011 to 2012 where memberships grew at a 2.1 percent rate.
What is the secret behind this growth? Credit unions and community banks are doing a good job of convincing customers that their money is secure in these institutions and that they will get more bang for their buck when it comes to saving money.
Credit unions and community banks in the past have been perceived as not being tech savvy, but many are, in fact, just as technologically advanced, if not more so, than many big banks. According to a study by CFI Group, credit union members rated their satisfaction at 90 out of 100 in online and mobile banking offered by their credit union versus 86 out of 100 among bank customers. Credit unions are leaders in mobile banking, online lending, online advertising, remote deposit capture, and are on the forefront of offering new emerging payment technologies like Apple Pay.
Many national banks charge hidden fees to use their financial products. Some banks, for example, require maintaining a high minimum balance to keep a checking account open each month. If the balance falls below the required minimum, it triggers automatic fees that are withdrawn from the account. Many credit unions and community banks typically offer free checking requiring little to no minimum balance to keep the account open.
Taking out a loan at a larger bank carries the risk of high interest rates and additional fees over time. You can get the same types of loans at credit unions and community banks that are available at larger banks. These loans--ranging from private student loans to small business loans--are available at much lower interest rates because credit unions are not-for-profit institutions and very few entities can match the powerful combination of volunteerism and social responsibility that credit unions offer. Credit union policy is established by boards made up of members of the credit union. This ensures the members' best interest is at the center of all credit union decisions.
Should I open an account?
Credit unions have surpassed 100 million memberships nationwide in June, 2014. That means nearly 1 in 3 Americans now have an account with a credit union.
There are many reasons why people have turned to credit unions and community banks for doing business. Broader eligibility requirements mean you don't need to be connected with a special group to join these institutions. You can join a credit union or community bank through an employer, school, church or community group. In many cases, you are eligible to join if you simply live in the geographic area it serves.
Becoming a part of a credit union or community bank can ultimately become a rewarding experience. Credit unions rank first in customer satisfaction among financial institutions according to a November, 2014 report from the American Customer Satisfaction Index.
The ACSI report found that credit unions ranked ahead of larger banks in several key areas, including:
- availability of products and services
- ease of making account changes
- interest rate competitiveness
- understanding account information
- courtesy and helpful staff