The Pros and Cons of a Local Credit Union
I remember the day I got my first bank account. My mother and I went to our bank, where I stood so short I could barely see the top of the counter, let alone the person sitting behind it. I hugged my mother’s leg while she talked about things I didn’t understand, but I did realize that I got a new t-shirt and a fancy bank balance book which was wonderfully, gloriously empty – except for the starting balance. Over the next few years I would be taught to save a portion of the allowance that I got on a weekly basis ($1/week), and every couple of months we would go and make a deposit into my bank account.
I didn’t realize this at the time, but this bank account was a local credit union that my parents had been going to since they moved into the city. It continued to be my bank account until I moved off to college, where they didn’t have a branch. Once I got a job out there, it just made more sense for me to have a bank branch nearby, so I started a new account at a different local credit union. This one continued to work well for me for a couple of years, until I moved, again, and yet again I did not have a local branch to go to, so I switched banks to yes, another local credit union.
I’ve always avoided big banks. I don’t exactly know why, but it probably has something to do with the fact that I was taught to use a local credit union, and that big banks have never offered anything for me to consider switching. In fact, in talking with friends who do use bigger banks, I’ve found that their banking solutions leave much to be desired.
The biggest reason why is the simplest one. My local credit union doesn’t charge me to use their bank. There is simply no monthly fee. I know of friends of mine who pay anywhere from $3.50 to $10+ each and every month for the privilege of using their bank. To me, that is insane, as you’re directly cutting into the profit that you’re making (interest) keeping it in the bank in the first place! My bank doesn’t charge me a monthly fee. It doesn’t charge me to use cheques (just to buy them in the first place). It doesn’t charge me to use ATMs (unless I use a non-credit union bank). It doesn’t charge me to use my debit card, no matter how many times I swipe it. These small differences can end up saving me a lot of money, as I’m not losing $3 here, $5 there to small petty things like using my debit card more than 15 times in a 4-week period.
Now, they do charge me for things like overdraft on our chequing account, or using an out of system ATM to deposit or withdraw funds, but that is true across all banks (as far as I know). And while my local credit union only has a few branches, and therefore ATMs, within a fair distance of me, the benefit of being with a credit union is that I can use any credit union’s ATMs without fees. That doesn’t just double or triple the ATMs available to me, it increases the chances of me getting a free ATM 6 or 7 fold.
Another huge positive for using a local credit union is the fact that they often offer better interest rates than big banks. As a smaller company they are more flexible and therefore able to ride the waves of the market, allowing them to offer their customers better interest rates. Personally, my bank has offered us a rate lower than my wife’s big bank loan. Again, because they are smaller and more adaptable to your local situation, the banks are more likely to work with the customer. Every time I’ve had to go into our bank to deal with them directly I’ve almost always had a pleasant and positive experience. The last time I sat down with the bank manager himself and told him that they needed to up their interest rates in order to remain competitive with online banking, and he not only agreed, he said that he has been talking with upper management about it for quite some time and is hoping to get it changed as soon as possible. Personally, this made me feel like this was “my” bank, where I had a say in what happens.
Unfortunately, the small, flexible, local credit union does have some drawbacks. While it deeply cares about its customers, it also cares about its employees, and that means that a lot of the branches don’t have the best hours for availability. I know that each branch is often closed throughout the weekend, and closes pretty early on weekdays too. When I work full time 9-5 Monday through Friday, I have a hard time finding a branch whose hours work with my schedule. And as I found out when I went to buy a car a couple of weeks ago, the entire bank, including the call centers, closes down every single day of a long weekend.
The most annoying problem, I would estimate, of using a local credit union, is the same problem I discovered when I moved from city to city. The locality of the bank means that when you are no longer local, the bank is more or less useless to you. I’ve had memberships at 3 different credit unions because of this. If I was someone who moved around a lot more often, or if I travelled for extended periods of time, or if I had two different properties where I split my time, then a local credit union wouldn’t make sense for me because I would need something that was national.
All in all, I would recommend a local credit union every time, simply because it costs less, seems more personable, and provides a sense of security. Unless you’re constantly travelling, moving, or need a lot of one on one attention from your bank, a local credit union is a surefire solution to your banking problems.
Do you use a local credit union? What positives/negatives have you had with your bank?