More and more Americans are choosing credit unions for their banking needs, and for good reason. While more people still use traditional banks, the unique benefits offered by a Texas federal credit union are drawing many people to this alternative. While banks are motivated by profits, credit unions are motivated to provide the best possible services to their members — because credit unions are set up as member-owned organizations. To learn more about what makes credit unions different from banks, read on.
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A Credit Union Is A Not-For-Profit Cooperative
Perhaps the most telling difference between credit unions and banks is that banks are for-profit organizations and credit unions are not-for-profit cooperative organizations that are owned by the members. Every member of the credit union owns at least one share in the credit union itself. All the financial benefits and customer service advantages that credit unions have over banks come from this fundamental structural difference. This basic difference in structure ensures that credit unions will put their members first, because the members are the stakeholders in the company. While banks may claim to put their customers first, history shows that they will put their shareholders first, because they own the company.
Credit Unions Offer Financial Benefits
Credit unions also offer significant financial benefits that banks just can’t match. For example, credit unions pay dividends to their members. Members who invest in stocks understand that many companies will pay out dividends to their shareholders based on how well the company is doing and how many stocks the shareholders owns. The principle in which shareholders of credit unions receive dividends is the same. Also, credit unions almost always offer lower interest rates on mortgages, car loans and other types of loans than banks.
Banks Can’t Match the Level of Customer Service Offered by Credit Unions
Last but certainly not least, banks can’t match the level of customer service offered by credit unions. Again, this comes down to the fact that while people who use traditional banks are merely customers, the members of a Texas federal credit union or another credit union own the institution itself. Accounts of large corporate banks opening unauthorized accounts in customer’s names or charging extortionate overdraft fees are often in the news, but these issues are virtually unheard of from not-for-profit member-owned credit unions.