How a Credit Union is Different From a Bank
Let's be honest, while most people maintain different financial motives, the objective is the same: A trusted financial institution with competitive products, accessible and effective service, simple usability... and perhaps a few perks along the way. All in all, just take care of me.
Forty-three percent of US consumers believe their primary bank does not understand their needs, and one in three people feel their bank is not helping them reach their primary financial goals.* This means that about half of Americas are at least having second thoughts about who is really looking out for them.
But this is the home of the brave, land of the free market! It isn't always easy to hit the reset button on your finances, but the choice is yours! It is your livelihood, after all.
Whether you are a first-timer or life-long banker who knows very little about credit unions, it does not hurt to learn the facts.
The Meaning of Commitment
Banks answer to shareholders. The job of a shareholder is to make money from investments. This means that shareholders are likely to behave in their own best interest, in order to make more money. The board of directors for most banks are made up of high ranking directors of other major corporations who – you guessed it – also tend to behave in their own best interest. Most banks apply certain regulations that can be quite dishonest, and only serve the consumer on a peripheral level.
Credit unions are democratic, not-for-profit cooperatives, or co-ops, and maintain their own co-op network of financial services. All credit unions are owned by the members who join their respective institution, each member an equal owner or member-owner. The boards of directors are elected and voluntary. Each member owns the exact amount invested, none of which lines the pockets of ultra-wealthy shareholders or corporate heavyweights.
We've All Got a Little History
Credit unions were created as a way to help those who were not wealthy enough to be "trusted" with traditional banking services. These individuals included farmers, tradesmen, and other non-wealthy locals. The purpose of the credit union was to maintain a cooperative institution so these citizens could enjoy the same necessary benefits from banking.
In America, they became especially popular in rural areas due to incredible agriculture. Financial reputations were no longer the only criteria. Maintaining a good reputation within, or providing a service for, the community was also factored into membership. Though credit unions have evolved over time, the idea of serving individuals and the community first has remained the fundamental distinction from banks.
Your Money is Your Livelihood, and That's Important
The reputation of a credit union is tied to its commitment to the community. Credit unions typically have lower fees on services, and higher interest rates on deposits. In maintaining their fundamental credo, they also service individuals in less favorable financial circumstances. This does not mean they provide sub-prime products and services to under-qualified individuals. Most banks and larger financial institutions are guilty of this practice, which at high volume results in economic crises, such as the mortgage crash of 2008. Conversely, credit unions have fewer and smaller fees, and provide realistic financial services with reasonable circumstances.
All financial institutions provide loans which contain interest, but interest is simply the price you pay to spend money that isn’t yours. Credit unions also offer better services for money saving, such as certificates and money market accounts, as well as services for students. Credit unions only do well when the financial lives of their members are successful. Therefore it is in the best interest of the credit union to serve the members and their needs. Any profits not used in operations are either used to increase dividens, or are invested back into the community. Most credit unions establish scholarship funds and promote events for the public or charity.
Taking Things Personal
The reputation of credit unions extends beyond products and services to include customer service and operations. When a bank’s obligation is to serve tens of millions of customers in dozens of countries worldwide, “personal” is a dangerous term to throw around. While credit unions are lower in volume, they are regarded for superior customer service. Studies show most consumers also cite security as the top reason to trust or switch their financial institution.* Where banks are insured by the Federal Deposit Insurance Corporation (FDIC), credit unions are insured by the National Credit Union Association (NCUA). Therefore credit unions are also subject to the same security regulations, so there is no less security risk in trusting them over banks. Moreover, though larger banks have the capacity to accommodate a large customer volume, they are likely to mitigate customer service through digital channels, including security and fraud claims. These one-size-fits-all approaches can leave you feeling more like a number and less like an individual.
Innovation and Convenience
At the height of demand for technological innovation, more companies are investing in online and mobile services to expedite convenience and usability. While historically, credit unions are reputed for an inferior commitment to the latest technology, some are exceeding expectations, even among larger institutions.
When you bank with BMI Federal Credit Union for example, you have access to secure and competitive online and mobile banking with supreme usability. Innovative features such as mobile check deposit, instant fraud monitoring, and budgeting tools come standard. BMI FCU also has an award winning financial education program, complete with one-on-one assistance, interactive online services, and community workshops on various topics. Geo-strategic membership ensures credit unions maintain certain flexibility over banks, especially in fulfilling individual member needs and desires.
Location, Location, Location
Credit unions are often criticized for their inability to adhere to the mobile member. Credit union branches are typically few, and are localized within a particular radius. This is again because they are invested in the communities in which they serve, so often initial membership requires some geographic commitment. This allows credit unions to provide excellent service unique to the members within that community. However, with increased technology and shared branching, limited banking with credit unions is a thing of the past! In addition to competitive online banking services, they partner with other financial institutions to ensure geography would never affect your service. This co-op, known as Co- Op Financial Services, helps ensure you receive the same quality wherever you go without interruption, while continuing to invest in the community you love.
For example, BMI Federal Credit Union opens membership to anyone who lives, works, worships, or attends school in the eight counties of central Ohio. Though with shared branching, members have access to nearly 30,000 ATMs, and shared branching with more than 5,600 locations nationwide.
Our Pride and Joy
Credit Unions were created by and for their community, so they maintain a particular loyalty not found among larger banks. Therefore a credit unions "best interest" is you.
At BMI Federal Credit Union, we love our eight counties of Central Ohio, and are committed to keeping our members satisfied wherever they may go. We are proud of are distinction from banks, and proud to continue to serve the community.
(1) View more statistics on banking from
Forbes, FICO, Latitude, Cisco, Saylent, and NerdWallet