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What are credit unions?
Financial institutions such as banks are known as credit unions. These are the places where people can invest their money or get loans. There is a difference between credit unions and banks. Credit unions are non-profit organizations, and on the other hand, banks charge interest rates from everyone. Credit unions always focus on the goal of serving their members. The fee of a credit union is much lesser than the banks. People can deposit their money in credit unions without any problem. They can get back their money without any hesitation. A loan from a credit union is possible on a lesser amount of interest than the banks. Before getting any further explanation of credit unions, let us discuss the pros and cons first.
Pros and cons of credit unions
The advantages and disadvantages of a credit union are the same as the banks. But a little bit change. There are many pros and cons of credit unions. Let us discuss a few of them one by one. We will focus on the pros of credit unions first, and then we will move towards the cons of credit unions.
Pros of credit unions
A credit union is a place where people are confident with saving their money. A credit union offers a lesser amount of interest on loans. There are many pros of credit unions, and some of them are as follows:
People are not customers in the credit union. But, they are a member of a credit union. Being a member of a credit union, people enjoy many facilities. They become a part-owner of their credit union. On the other hand, they also receive dividends and their rights.
One of the best pros of credit unions is the lower fees. A credit union offers its members feasibilities in the costs. The cost of a credit union member is much lesser than the commercial banks. Hence, people save their money while considering a credit union. So, having a credit union account charges less than having a traditional bank account.
The third best advantage of considering a credit union instead of a commercial bank is the better rates. If you take a loan from a commercial bank, then you have to pay charges on interest. These charges are very high to pay, and interest increases over time. On the other hand, there is no such interest in credit unions. If you get a loan from a credit union, you have to pay low interest. It saves you more money.
The members of the same group or community make possible the credit union. They run a credit union more efficiently. Hence, a credit union is especially giving benefits to all of the members. On the other hand, a credit union provides feasibilities to people of a community.
Customer services of a credit union are to serve the people effectively and efficiently. Usually, people can expect better customer services in credit unions as compared with commercial banks. The reason behind such customer service is the lesser size of a credit union. The area of a credit union is lesser than the commercial bank’s size. That is why the staff of a credit union focuses on their customer needs. They serve their members in a better way than the commercial or traditional banks. A credit union focuses on benefits to its members as well as the customers.
Cons of the credit union
There are many drawbacks of a credit union. Let us discuss a few ones that are the most common. Here are the most common cons of a credit union:
One of the most common drawbacks of every credit union is the paid membership. If you are the person who is looking forward to getting a membership in a credit union, then you have to pay for it. Behind a great benefit of saving money, here you have to pay.
No guarantee of insure
Before investing in a credit union, you have to ensure each and everything. There is no guarantee that a credit union will remain lenient to the premises. Hence, you have to take care of your savings. If your saving has gone, there is no way to recover. So, you have to be very careful before investing in a credit union.
Limited offices and ATMs
A credit union is not a commercial bank. So, there are limited offices of the credit union that we can see. Due to the lesser amount of Automated Teller Machine (ATMs), you may face many difficulties in withdrawing money from your account. It is the most common cons of the credit union. People have to travel from one place to another to find out the ATMs.
More limited services
As we think that a credit union is an organization, so it is smaller than a commercial bank. The area of credit union offices is much smaller as compared with the traditional bank areas.
Lack of technology
A credit union is smaller than a commercial bank. So, that is the reason why a credit union offers fewer services. Because of the limited offices of a credit union, here we face a lack of technology. The technology used in a credit union service is older than commercial bank technology. A credit union does not have up-to-date technology. They have small offices and fewer services that is why they do not focus on the technology changes. Credit unions are a victim of myopia.
In final thoughts, financial institutions such as credit unions are the places where people can invest their money or get loans. There is a difference between credit unions and banks. Credit unions are non-profit organizations, and on the other hand, banks charge interest rates from everyone. Credit unions always focus on the goal of serving their members.