Your Bank Won't Love You the Way Your Credit Union Will
Gina Ragusa May 16, 2011
If you've ever been on a date and ended up paying more than you expected (or was even surprised to be paying at all) then you know what it's like to be a bank customer.
From sneaky fees to outright charges for human interaction, being a bank customer is like walking through a landmine-incrusted field of fees--simply put, deposit rates are low and fees are high at many multi-national banks.
Now that the average American is operating with less money, where can you turn to avoid a financial mugging?
As banks keep hiking fees and providing less service, credit unions are quietly holding steady to long-time practices of competitive rates, low fees and a friendly helpful hand.
From CNN Money to MSNBC, mainstream news outlets have picked up on the bank/credit union differences and are reporting how you can hang onto more of your money--simply by choosing a credit union over a bank.
Why Choose a Credit Union Now?
Basically, most consumers won’t suffer death by fees when they go with a credit union. The credit union philosophy of "people helping people" has never been stronger--credit unions are owned by the member and operate solely for the member.
According to Steve Brown, Marketing Director at Five Star Credit Union, the main difference is that a credit union is a non-profit member-owned institution.
"The main reason people should consider a credit union is that we’re here for our members--it’s a completely different mindset. When we make a decision, it is in the best interest of our members. Every time we examine rates and fees, we have to consider how this will ultimately impact the people we serve."
Brown contrasts this comment with the perspective coming from large billion dollar banks. "However, when banks look at rates and fees, their primary allegiance is whether it’s in the best for our executive bonuses and stockholders--not the customer."
John Gallinagh, President/CEO of MetroWest Community Federal Credit Union echoes Brown’s sentiment.
"I think another huge distinction between credit unions and banks is the overriding purpose driving credit unions. Credit unions are available solely for the member and consumers often find that they receive better personal service at a credit union. I'm amazed every day how the people who work here know the people who come into the credit union."
Gallinagh explains that his employee team is a tight knit bunch who share a common goal of maintaining member relationships. "You don’t often find that at a bank--there's a lot more turnover at the retail level."
Great service delivered by happy people seems to be another consistent theme. Gary Lanier VP/Branch Services at TDECU feels strongly about service delivery. "The number one reason (people should consider a credit union) is the employees. They love working for credit unions and the members."
Lanier adds, "I have talked to a lot of employees who worked at banks and now work for a credit union, and the overwhelming sentiment is they wish they had made the switch sooner."
If Credit Unions are So Great, Why Isn't Everyone a Member?
The notion that consumers continue to pay exorbitant fees for simply using an ATM or visiting a teller (who probably doesn’t know their name) at a bank continues to be puzzling. If credit unions are so incredible, why isn’t everyone running to their local community or corporate based credit union and opening a share account?
Credit union executives offer a smattering of reasons why the general public hasn’t jumped off the fee-hungry multi-national bank merry-go-round and made a switch.
Lanier believes it may have something to do with not being able to have a branch on every corner.
"In general, credit union membership growth across the country has been hampered by not having a large enough branch network that is convenient to the entire household. Historically, credit unions built branches close their SEGs, but if the spouse who controlled the family finances didn't work for that SEG, the credit union didn't get the business. That obstacle is being overcome with the convenience of mobile banking, having the option to deposit a check by taking a picture of it with your smart phone and third party providers who can assist members 24 hours a day."
Brown agrees that the branch-network conundrum is also an issue. He shares a story where a member closed a certificate account because of branch proximity.
"We closed a branch in a town located a few hours from here--the branch wasn’t receiving a lot of high traffic and was simply too far to maintain. After the branch closed, a member called and said wanted to close his account simply because we closed the branch."
"I looked up his account and all he had with us was one certificate---that he’s had for 10 years but never touched it! I mentioned that to him, but he said that he still wanted to close the account because he felt he needed a branch in case he wanted to take the money out."
In addition to branch locations posing a possible hurdle, credit union executives admit that banks simply have more man and money power to self promote.
Brown says that some people still hear the term "credit union" still think they are joining a union. "Plus banking is so ingrained in people."
Lanier believes that the credit union industry has done a poor job of promoting itself on a national scale. "We haven't effectively educated the national news outlets or Hollywood. It's rare to see a credit union branch or sign used in a movie or TV show. It sounds insignificant, but how many teens and young adults determine what is mainstream or cool based on what they see on TV?"
Gallinagh says that in many cases, credit unions simply don’t have enough resources to compete but word of mouth may help. He explains that when his young adult children were ready to open an account, he asked them to choose the financial institution that will allow them to hold on to as much of their money as possible.
"I told my kids that if they really want to save their money and not have to pay service fees just for having a checking account, to consider a credit union."