Nearly one-third of all Americans belong to a credit union. Frankly, we were interested to find out why that figure is not significantly higher. After all, credit unions seem to offer significant advantages over many banks: lower interest rates on loans; higher yield on deposits; low or no service fees; active participation in the community. The list is lengthy.
Probably the only advantage national banks continue to have over credit unions is accessibility. The major bank brands simply have more branches. However, credit unions have made great strides with their online services such as BillPayer, mobile apps, e-statements and personal financial managers. With all these online options, the need for face-to-face banking has diminished. Financial institutions that offer a solid combination of online and person-to-person should be equipped to handle the vast majority of member needs.
Let us dig a little deeper.
Account fees
This may be the biggest knock on banks. They tack on whopping fees for items such as overdrafts and monthly maintenance. In fact, the average monthly account maintenance fee has leaped by 18 cents to $12.26. That adds up to about $150 a year. Bank overdraft fees average more than $30. Another fee that generates a ton of income for banks is out-of-network ATM charges, which average close to $3 per transaction.
Conversely, over 70% of the largest credit unions provide free checking. Some credit unions charge overdraft fees that cost $20 to $30 per incident. The average monthly credit union maintenance fee is between $2 and $5. However, credit unions typically do not charge the fee unless the account dips below $30 or less.
Clearly, consumers seeking to avoid high bank fees should consider moving their money to a credit union.
Interest Rates
With interest rates hovering around the puny to sub-puny level for quite some time now, it is difficult to find any institution that offers a high-yield rate that will help your money flourish. That said, credit unions clearly hold an advantage over national banks. You are far more likely to find higher yields on products such as CDs, money markets and savings accounts from credit unions. The low interest rates are good news for those shopping for cars, homes and credit cards. Loan products remain at amazingly low rates across the board. Once again, credit unions usually hold an edge over banks when it comes to loan rates.
Customer Service
According to the most recent American Customer Satisfaction Index (ACSI), the overall customer satisfaction level for banks is 78 - a one-point jump over the prior year. Banks score the highest on "courtesy and helpfulness of staff," with a 91; and they score the lowest on "competitiveness of interest rates," with a 73.
Credit unions score another victory over banks in this category. The most recent ACSI report rates credit union customer satisfaction at an 85 -- a 3.7% rise over the prior report. Like banks, credit unions score the highest on "courtesy and helpfulness of staff," with a 93; and the lowest on "number and location of branches," with a 71.
With all this evidence in favor of credit unions, one has to wonder how banks have been able to maintain such a market share advantage.
If you are reading this blog, you are most likely an AltaOne member. Here is your call to action: spread the word. Tell your friends, family members, co-workers and neighbors about the credit union advantage. You do not have to pester them. Nevertheless, when the topic arises about a car loan, or mortgage or credit card ... or anything that pertains to the banking world ... put in a good word or two for credit unions and AltaOne. We appreciate the plug.
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