Should You Drop Your Bank for a Credit Union?
While qualifying for a credit union might be a little more difficult, these non-profits have several advantages over traditional banks, especially for folks with bad credit.
There are a lot of reasons to be skeptical of banks. Each day seems to bring a new banking scandal, whether it’s Deutsche Bank or Wells Fargo or Wells Fargo or even Wells Fargo. It’s perfectly reasonable to be looking for other options. But what kind of alternative to a traditional bank can provide you with checking and savings accounts, credit cards, personal loans, and other financial services?
Consider the credit union!
So what exactly is a credit union?
“A credit union is a not for profit cooperative financial institution owned by members, rather than stakeholders as in a traditional bank,” explained Sha’Kreshia Lewis (@ShaKreshiaLewis), CEO of Humble Hustle Finance. “Members meaning their local community. Members within the community elect a volunteer board of directors.”
Lewis also explained how you can join:
“Qualifying membership in a credit union is based upon 5 factors: to volunteer, live, work, worship, or attend a school within the community. Upon approved qualification, you will pay a one-time membership fee and a deposit usually of up to $25.
“Profits cycle back to the community in a credit union. They, in turn, offer education programs, scholarships, better rates on loans, and even higher interest rates on savings accounts.”
Credit unions have great bad credit banking options.
Banks are pretty restrictive if your credit isn’t in a great place. Can credit unions offer better options if you have less than great credit? The answer seems to be: quite possibly!
“Securing a loan will be difficult, however. Credit unions typically use the same standards as traditional banks to qualify applicants for loan products. The benefit of joining a credit union is that they offer a variety of products and the rates are usually much lower than traditional lenders.”
Lewis also offered her opinion on what can make credit unions an appealing choice over banks: “Just like a traditional bank is insured by the Federal Deposit Insurance Corporation, a credit union is insured by the National Credit Union Share Insurance Fund of up to $250,000. Members can access their money through a number of ATMs which include low fees.
“$mart Choice checking accounts are also a benefit that credit unions offer. These accounts are based upon a Chex Systems record and come with a small monthly service fee. If you have a record of $800 or less and you live, work, worship, volunteer, or attend a school within your local community then you would qualify.
“After 12 months of no NSF fees (non-sufficient funds), no negative balance, no delinquent loans, not being in the process of filing bankruptcy, or not be subject to any legal or administrative order or levy then you can request to be moved to a regular checking account.”
Many credit unions offer alternatives to payday loans.
Predatory no credit check loans like payday loans, title loans, and cash advances can wreak havoc with a person’s finances. With much higher rates than your standard bad credit loan, these loans can trap borrowers in a never-ending cycle of debt. And while a bad credit installment loan can make for a great alternative to a payday lending, many credit unions offer something even better.
Christina Disbrow is in charge of digital marketing and community outreach at Coral Community Federal Credit Union and here’s her recommendation:
“Joining a credit union can be a great choice for anyone regardless of their credit score. For people with poor credit it can be especially beneficial, because they are willing to take chances to give loans to people with poor credit. Like any lender, interest rates will be lower for those with good credit, but the rates are much, much lower than if a consumer used a cash advance store or financed a car through a dealer.
“Our credit union offers yearly $800 No Credit Check Loans and Skip-A-Loan-Payments. Our members qualify as long as they have been at their job for a year, their loans are in good standing and they have direct deposit set up.
A community credit union might be your best bet to qualify.
“Credit unions are a great choice over traditional banks for anyone regardless of their credit score because they are not-for-profit financial institutions,” says Disbrow. “That means our profits are returned to our members instead of our stockholders. This means we are able to offer lower APR on loans and higher rates of return on our interest-bearing accounts.”
Many credit unions have become Community Credit Unions, meaning that anyone can join as long as they (or a family member) live, work, go to school, or worship within the boundaries set forth by the financial institution and offer Co-Op services, meaning our members can deposit and withdraw funds from other credit unions.
“This means credit union members have access to over 5,000 locations throughout the country. Credit unions are regulated by the National Credit Union Association (NCUA), which is essentially our version of the FDIC, meaning your money is safe with us and we offer the same technology as banks such as online and mobile banking but without the fees.”
So is it time to give up your bank?
Maybe, but you might not even have to.
“You don’t have to leave your current bank to have a credit union,” Lewis told us. If you plan to buy a home or a new car in the near future then a credit union is the right choice for you. Before deciding, be sure to compare rates, fees, and proximity of a credit union near you.”
There you have it. Should you check out your local credit union? Might as well see what they offer!
To learn more about alternatives to traditional banking, check out these related posts and articles from OppLoans:
- How to Survive in a Banking Desert
- Is It Time to Break Up With Your Bank?
- Banking Basics: 5 Types of Bank Accounts
|Christina Disbrow manages the business development and social media marketing at Coral Community Federal Credit Union in Fort Lauderdale, Florida. She enjoys her role in expanding Coral Community FCU’s membership and educating consumers on the benefits credit unions offer to the community. A nonprofit management expert, Christina is the founder of All Write, All Write, All Write a boutique development firm specializing in advocacy, communications, and fundraising. She helps nonprofits save the world by helping spread their message and raise money for their mission.|
|Roslyn Lash (@RosLash) is an Accredited Financial Counselor and the founder of Youth Smart Financial Education Services. She specializes in youth financial education, adult coaching and works virtually with adults helping them navigate through their personal finances i.e. budgeting, debt, and credit repair. Her advice has been featured in national publications such as USA Today, TIME, Huffington Post, NASDAQ, Los Angeles Times, and a host of other media outlets.|
|Sha’Kreshia Lewis (@ShaKreshiaLewis) is an AP Clerk in the oil and gas industry. After 6+ years experience in the financial field she has set out on her own to passionately help others. She is the founder and CEO of Humble Hustle Finance, a financial platform educating emerging adults on the importance of money management.|