Ever found yourself wondering what the difference between a credit union and a bank is? Can being a credit union member help your finances in ways banks cannot?
This article will explain the difference between a credit union and a bank and outline some benefits that credit unions offer.
It’s important to note that every credit union is different – each provides unique benefits. However, many of these institutions offer quality products that can help you on your journey toward managing your debt, improving your credit, and building a lifetime of financial wellness
Credit Unions vs. Banks
Credit unions are not-for-profit financial cooperatives where the members of the credit union are the owners. Banks, on the other hand, are for-profit and have shareholders. A credit union returns any profits to members in the form of low- or no-fee services, competitive rates on loans and savings products, free financial education resources, and a host of products and services all designed to help members achieve more, for example.
Can a Credit Union Help Me Improve My Credit Score?
Becoming a credit union member does not improve your credit score solely by association. But taking advantage of the products, services, and resources offered by credit unions like PSECU, such as our Secured Visa® card, free credit score service1, and financial educational programming, could help you get your credit on track.
How Will Joining a Credit Union Help My Finances?
As a not-for-profit financial institution, credit unions typically offer an array of wallet-friendly products that can help you save money and pay off debt faster, which may allow you to more easily fix and build your credit. Check out the following four ways credit unions can help you save money, so you can pay off your debt and get your finances back in order.
1. Fewer and Lower Fees
Because credit unions return their surplus earnings to members in the form of low or no fees, this means members keep more of their hard-earned money where it belongs – with them. Even a small amount of savings goes a long way toward improving your finances when used correctly.
2. Competitive Interest Rates
Competitive interest rates on loan products are one of the most significant benefits that most credit union members enjoy. Competitive interest rates mean less to pay off in the future, so you can accrue less debt when you’re carrying a balance or taking out an installment loan. You can also pay off your bills faster since more of your monthly bill goes toward paying your actual debt and not just interest – which gets you that much closer to being debt-free.
3. Secured Cards
Many credit unions, like PSECU, offer secured credit cards for members to help build their credit. With a secured card, you place funds in your account that you “borrow against.”
For example, if you put $1,000 into your account, you can charge your card up to $1,000. Different card companies have different requirements. For our secured Visa, you may borrow between $500 and $2,500 with member-friendly collateral requirements - $200 or 25% of credit limit (whichever is higher). It’s also important to note that the funds in your Regular savings share that secure your card cannot be accessed for any use. But although they’re “frozen” and unavailable for use, they’ll continue to earn dividends at the prevailing rate.
Since most traditional credit cards require a minimum credit score which may be out of reach for some, a secured card can help you start building or repairing your credit history and score, so you can qualify for unsecured credit in the future.
4. Free Money Management Resources
A credit union is more than a place to store your money or take out loans – it’s a place you can turn to for financial guidance through every stage of life.
As a member-owned institution, a credit union aims to provide its members with benefits and resources that can help improve their lives financially. We offer an array of financial education resources on our website to help our members make smart budgeting, credit, savings, lifestyle, and security choices.
Our resources are for every age and every stage of life including college students, young adults, parents, and seniors. You’ll learn about the latest financial facts and statistics, as well as actionable tips you can apply to save yourself money.
Start Saving Today with PSECU
We offer many benefits, discounts, and perks to thank you for putting your trust in our services. Some examples include:
- Free checking and a cash rewards2 debit card, which can help you keep more of your hard-earned money where it belongs – with you.
- Easy and convenient digital banking tools to manage your money anytime, anywhere.
- Member discounts on phone plans, tax preparation services, and more.
We offer many ways to join, so apply today to start enjoying savings and benefits that can help you get your finances back on track.
1PSECU is not a credit reporting agency. Members must have PSECU checking or a PSECU loan to be eligible for this service. Joint owners are not eligible.
2You can earn $0.10 cash rewards on eligible purchases of $10 or over with a PSECU checking account and one or more qualifying monthly direct deposit(s) totaling at least $500. You can earn $0.05 cash rewards on eligible purchases of $10 or over for accounts with a PSECU checking account. Certain restrictions may apply. See the Visa® Debit Card Rewards Program Terms and Conditions for full details.
