MADISON, Wis. (4/28/11)--Credit unions are better than commercial banks, primarily because credit unions work for the member/consumer, while banks work for their shareholders, according to a “My Money” columnist for UsNews.com
. In a Tuesday column, ‘Why You Need a Credit Union Account,” author Jim Wang said that while credit unions have been around for quite some time, it hasn’t been until the past few years that they have grown in popularity as consumers have become aware of the self-centered excesses of “too big to fail” commercial banks. Wang said that some of the other reasons that credit unions are better than banks are:
* Credit unions generally are smaller, which typically means better service. The fewer members/customers, the less likely each member/customer becomes an account number. When a financial institution gets to a certain size, everything gets reduced into a spreadsheet line item and it loses a bit of the human element. * They have better rates. Consumers can find some of the best certificate of deposit (CD) rates and car loan rates at a credit union. Banks make their money by borrowing cheaply--from deposit accounts such as CDs--and lending it for more--such as on mortgage and car loans. Credit union members--the ones depositing and borrowing money--are the beneficiaries of any profits. * Fees and minimum balances are usually lower. Most credit unions have share-draft accounts with low minimums and low or no fees. Without a profit motive, there’s little incentive to get people to deposit more to increase loan amounts. * Members can try to join the board. The board of directors at a credit union is made up of its members. * National Credit Union Administration insurance is as good as Federal Deposit Insurance Corp. insurance.
To read the column, use the link.