Managing your finances is more than just making a budget or saving your money. It is also about the type of financial institutions you choose to associate with. Now, if you are a resident of Bakersfield, two options regarding financial institutions come to mind: a credit union and a traditional bank. Both choices have their own pros and cons and are the top choices for the residents.
Whether you are applying for loans, credit cards, or opening savings accounts in Bakersfield, there are numerous factors that one must consider. However, in recent years, credit unions have become increasingly popular for all the right reasons. In the article below, we will discuss them in detail.
What is a Credit Union?
A credit union is a not-for-profit financial organization with functions similar to those of a traditional bank. It takes deposits on your behalf, provides loans, and offers a wide range of other products and services.
Now, the basic difference between a bank and a credit union is that the latter is member-owned. This means that if you are a member of the credit union, you are also its owner.
As mentioned above, the credit union operates on a not-for-profit principle, meaning it prioritizes the well-being of its members. The credit union's profits are returned to the members in the form of lower interest rates on loans, higher returns on savings, and reduced fees.
Why Should I Choose a Credit Union?
A credit union has several advantages that most traditional banks lack. Banks are for-profit organizations whose sole objective is to make money and sell their products and services for financial gain. On the other hand, the principles on which a credit union runs are entirely opposite. Let us look at a few points on why an individual should choose a credit union.
1. Lower Interest Rates
The interest rate is the primary factor in choosing a credit union. Since a credit union is a not-for-profit organization, the interest rate at which it offers loans is also very low. This is a blessing for individuals who want to save money on big purchases. Even a reduction in the interest rate by a few percentage points will help you save thousands of dollars in the long run. Remember that small savings will help you achieve big financial goals. So, if you are looking for a loan, you must consider a credit union over traditional banks.
2. Higher Returns
If you have a savings account in a credit union, you also enjoy higher returns. These financial institutions are able to offer higher returns because they prioritize the well-being of their members. So, whatever profit is generated by the credit unions is distributed back to the members.
3. Better Customer Services
If you are annoyed with the delayed services offered by traditional banks, a credit union is your answer. Credit unions offer excellent customer service, which every member appreciates.
Credit unions adopt a highly personalized approach, providing tailored financial solutions and products to each member. Grievance redressal in credit unions is speedy. They try to resolve their members' problems as soon as possible, leading to better customer satisfaction.
4. Community Centric-Approach
Credit unions also have a very community-centric approach. Apart from providing financial assistance, these institutions also work for the development of the community. They work closely with the people in and around the area, support local initiatives, and invest in local projects.
5. Lower Fees
If you are annoyed with paying convenience fees for every purchase you make from a traditional bank, you are not alone. To solve this problem, credit unions focus on eliminating different service fees, such as monthly account maintenance or transaction charges.
Conclusion
Credit unions are financial organizations that prioritize the well-being of their members over profit. Therefore, if you are tired of the high interest rates that banks charge, their slow customer service, and high fees, a credit union is a better solution.
