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Financial Literacy

Busting 7 Common Misconceptions about Credit Unions that Made You Nervous to Join

Brittney Monteith | June 21, 2017

Credit unions only make up 7.1% of the financial market share but consistently score higher in customer satisfaction than banks. Why then do so many consumers hesitate to join one? Certain myths persist about credit unions that make it appear to be simpler to just continue on at a traditional bank. We’re breaking down these misconceptions and finally setting the facts straight. Get the correct facts about credit unions as we bust these seven common misconceptions!

Misconception #1: It is difficult to join a credit union.

Credit unions do have membership eligibility requirements. However, it is not nearly as difficult to qualify for membership at your local credit union as many think. You may be eligible because of where you work, where you live, if you volunteer in the community, and more. For example, to be eligible for membership at AmeriChoice, you simply have to either live, work, worship or volunteer within one of the participating counties. One helpful site that can narrow down which credit unions you are eligible for in your area is ASmarterChoice.org.

Once you find a credit union you want to join, they can make the process easy with helpful switch kits. These kits will detail all the steps you should take to switch your finances over to a new financial institution.

Misconception #2: Credit unions don’t offer as many products as a bank.

Credit unions may not hold as large a market share as banks, but they do provide all of the same products and services you would expect of a financial institution. No matter the type of product you’re searching for, you can find it at your local credit union.

  • Checking accounts
  • Savings accounts
  • Credit Cards
  • Auto loans
  • Mortgages
  • Student loans
  • Small business loans & accounts
  • and much more!

Misconception #3: Their technology is behind-the-times.

One of the top misconceptions credit unions combat is the myth that we don’t invest in the same technology as larger banks. Almost all credit unions offer online services like home banking, mobile banking apps, and even mobile check deposit on your phone.

In fact, you don’t even need to visit a branch to apply for membership or a loan any longer. Plus, since the organizational structure is less complicated than a national bank, you can expect decisions to be made on a much faster timeline. If you have a special situation, you can speak directly to the person responsible for granting your approval. So not only do we offer the same technology, but we back it up with stellar customer service.

Misconception #4: They don’t offer as much security as a bank.

Banks insure their account holders up to $250,000 through the Federal Deposit Insurance Corporation (FDIC).  Some have the impression that since credit unions are not backed by the FDIC, they are less secure. But the fact is that credit union members are also insured up to $250,000, just through a different federal organization. Credit unions are instead insured by the National Credit Union Administration (NCUA).

Misconception #5: Credit unions charge the same fees as other financial institutions.

If financial institutions offer the same products and services, then their fees and rates must be the same, right? Wrong. Credit unions benefit by being not-for-profit institutions. This means that any surplus earnings go back to members in the form of lower fees and lower interest rates on loan products.

One of the easiest ways to see this in action is comparing the number of free checking accounts available at banks vs. credit unions. In a recent survey, 84% of credit union checking accounts came without any monthly maintenance fees. Only 38% of banks offered the same no-strings-attached checking accounts.

source: http://www.bankrate.com/banking/checking/want-free-checking-chances-are-the-nearest-credit-union-has-it/

Misconception #6: They are inconvenient.

Since most credit unions are based locally, a common misconception is they are inconvenient in comparison to large, national banks. If you’re someone who physically needs to visit a branch routinely, you should make sure that the credit union you choose does have a branch located nearby. If not, then access to online services and ATMs will likely be just as convenient as any major bank.

Many credit unions, including AmeriChoice, are a part of the Co-op ATM network. This is a nationwide network of over 30,000 ATMs that will not charge you a surcharge fee for accessing your money. This partnership allows members to skip out on fees no matter where in the country they are. You can search for nearby participating ATMs here.

If you want to do the majority of your banking online, then credit unions are also a very convenient choice. As mentioned above, most have invested in home banking systems and mobile banking apps. You can direct deposit your paycheck or snap a picture of it on your phone with mobile check deposit. You can transfer funds, view account histories and more with the click of a button. Now that’s convenient.

Misconception #7: Rewards programs are lacking.

Big banks often lure in new customers with the promises of airline miles, bonuses, or discounts on popular items. Big banks do not have a monopoly on the best rewards programs. Credit unions also reward loyalty with a variety of incentives.

At AmeriChoice, we not only offer rewards based on your membership level, but also additional rewards through our Benefits Plus program. Free rewards include notary service, free money orders, and even VISA gift cards. If you add on Benefits Plus, you can also receive discounts on popular goods and services, as well as access to identity theft assistance programs. These perks are just the tip of the iceberg.

Most credit unions offer some sort of rewards for their members, this is not an exclusive benefit to bank customers.

Have you changed your mind about credit unions yet?

Credit unions were created to give consumers financial choice. Their purpose is to give you more than one option of where to keep your money safe. Their popularity is growing as more people realize that large banks are not giving customers the respect and service that they deserve.

If you want to learn more about how credit unions compare to banks, read our blog post, “The Real Difference between Credit Unions and Banks.” Then decide if banking locally is the right choice for you.