If one of your goals for 2017 is to improve your financial situation, becoming a member of a credit union is a no-brainer! Here’s a breakdown of what they are and how they can help you keep your personal finances on point.
What is a credit union?
Credit unions and banks are similar: they offer loans, deposit accounts and other financial services. The main difference is that a credit union is a not-for-profit organization that exists to serve its members while a bank is a for-profit corporation.
- Are owned by their members
- Exist to serve their members
- Provide advantageous interest rates to their members
- Are owned by shareholders
- Exist to maximize profit for shareholders
Okay, now that we all know what's going on we can get down to the real reason you’re reading this: you want to improve your financial situation -- joining a credit union is a smart financial move for several reasons:
1. You can earn a higher interest rate on your deposits
The difference in rates offered by banks and credit unions varies and fluctuates, however, the comparison below will give you a sense of the difference. These rates are current at the time of this publication. (APY=Annual Percentage Yield)
•Interest Checking Account
Wells Fargo = .01% APY ($500 minimum)
Lafayette Federal Credit Union = .025% APY ($5 minimum)
• Regular Savings Account (up to $20,000)
Wells Fargo = .03% APY
Lafayette Federal Credit Union = .10% APY
Variation is even more apparent on CDs, or Certificates of Deposit. These are savings that you agree to keep in the bank or credit union for a predetermined amount of time before making any withdrawals. This period of time is called a “term length. “
• 1 Year CD
Wells Fargo = .05% APY (under $5,000)
Lafayette Federal Credit Union = .65% APY ($500 minimum)
2. You can pay a lower interest rate on your loan
Standard interest rates vary for different kinds of loans, but comparisons here also show a real difference between credit unions and banks.
• 30 Year Fixed-Rate Mortgage
Wells Fargo = 4.437% APR
Lafayette Federal Credit Union = 4.125%/4.320% APR
• Used Car Loan, 72 months
Wells Fargo = 3.63%
Lafayette Federal Credit Union = 2.24%
Depending on the reason you need a loan , securing one through a credit union can equate to big-time savings.
3. You’ll enjoy complimentary – and attentive – financial advisors
If you’ve found customer service at your big bank lacking, you’ll be pleasantly surprised by the attention you receive at a credit union. Because they’re generally smaller, credit unions provide more personalized financial advice and will usually assign you an account representative who makes it their job to become familiar with your personal financial goals. Many also offer free classes and seminars to help their members become more finance-savvy.
4. You’ll appreciate member discounts and rewards (tax software, insurance, travel)
Often times, credit unions use their members’ buying power to secure nice discounts on popular products and services. Lafayette Federal Credit Union, for instance, offers its members discounted rates on TurboTax software, insurance for home, auto, life and loans, and travel discounts. If you don’t at least investigate offerings from credit unions when you’re considering CDs, loans and other products then you’re doing yourself – and your wallet – a big disservice.
Lafayette Federal Credit Union is one of the premiere financial institutions in the Washington, DC area and membership is available to residents of Maryland, DC and Virginia. Learn more about the cooperative spirit that drives Lafayette Federal Credit Union and how we can help you find more favorable rates and terms while providing top-notch customer service.