Are you thinking of joining a credit
union but not sure whether it’s a smart move for your personal finances?
In a country where commercial banks
are the go-to institution for almost everyone’s financial needs, from checking
to savings, it’s easy to see why you’re on the fence about becoming a credit
union member.
But, considering that credit unions
across the US serve over 100 million people, you’ve got to wonder why so many
people are joining them.
In this article, we’re sharing the
benefits of a credit union, so that you don’t have to keep wondering about what
you stand to gain.
Read on!
1.
Lower Loan and Credit Card Rates
If you’re anything like most
Americans, you definitely have a couple of loans to your name. One of the key
things to consider when taking out a loan is the interest rate. You always want
the lowest rate you can get.
Unfortunately, this isn’t always
possible. Unless you’ve got excellent credit and you’re backing up the loan
with a valuable asset or solid paycheck, you’ve to make do with higher rates,
especially if you’re borrowing from a bank.
Credit unions have a reputation for
offering lower rates on loans and credit cards compared to traditional banks.
Don’t believe us? Here are some numbers:
In March 2020, the national average
rate on a 30-year fixed-rate mortgage offered by credit unions was 3.71%. In
banks, it was 3.79%. The difference might look marginal, but wait until you’re
paying off a $200K mortgage and you’ll realize just how big a difference a rate
that’s lower by a couple of points makes.
This is the trend across most credit
products. If you’re shopping for a credit union because you want to access lower
rates, you won’t be disappointed.
2.
Easier Access to Credit Facilities
Although banks are the leading
lenders, their eligibility requirements for loans and credit cards are so high
not many people qualify. If you’ve had bad credit and tried to get a personal
loan from your local bank, you certainly know the story: rejection.
The good news is credit unions have
fairer eligibility requirements. As long as you’ve been a member for about six
months and built a savings history, there’s a good chance you’ll qualify for a
loan.
3.
Build a Savings Habit
When hit with a $1000 emergency, only 39% of Americans can afford
to settle it without borrowing.
If you’re not in this group, you
probably aren’t a good saver. We’ve always been told to put some money away for
a rainy day, but doing so is easier said than done.
Joining a credit union can be all
you need to become a habitual saver. Credit unions are founded on strong
principles of saving money. Especially if you’ve got bad credit and can’t get a
loan anywhere else, knowing that a credit union will lend to you if you build a
savings history is enough to spur you into being a good saver.
Enjoy
the Benefits of a Credit Union
Joining a credit union might seem
like an unnecessary thing to do, but it’s a good thing for your personal
finances. From lower rates on loans and credit cards to easier access to those
loans, the benefits of a credit union can’t be matched by banks.
Join one today, and keep reading our
blog for more money tips and insights.
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