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If you have difficulty with managing your finances, one thing that you can do to improve this situation is to make sure that you are keeping your money in the right place. Some people have accounts with banks, while others use credit unions. In most cases, you haven’t given these entities much thought, or seriously contemplated which is right for you. However, there are some differences between a bank and a credit union, and pros and cons that go along with each. Switching to a bank or a credit union can be the first step in getting your finances under control. For more information on credit unions and banks, read on! Credit Unions A credit union is a non-profit organization that relies on its customers (also known as members) to stay in business. Credit unions provide services such as credit, loans, and savings for their members. Members of a credit union have something in common – whether that is being part of a particular community, religion, place of employment, organization, etc. Credit unions work by pooling their customers’ money in order to finance their loan portfolios. This means that credit unions don’t have to rely on outside investors and capital in order to give loans to their members. This allows members to get better loans. Other benefits include fewer fees and a higher return on savings. No matter how big or small your account in a credit union is, if you are a member, you can run for the volunteer board of directors. This will allow you to cast votes in various elections. Banks On the other hand, a bank is a for-profit institution that is owned by stockholders. Clients of banks are generally have a high or middle income level, and they are not united by any common thread. Stockholders are in charge of voting and sitting on the board of directors. Votes of board members are weighed based on their stock. Sometimes, banks offer additional services that credit unions do not, such as investment opportunities. Which is right for you? There are several pros and cons of both credit unions and banks. Some pros for going with a credit union over a bank include:

  • Superior service. Oftentimes, credit unions have superior service for customers than banks do. This is because customers are also members of the credit union and help to keep the credit union going.
  • Lower interest rates. Members generally get higher savings account rates and lower loan and credit card rates. This can help you pay off your debt.
  • Accounts are more basic. Most credit unions won’t charge a fee if you don’t have a minimum balance in an account. This can be helpful if you cannot put a lot of money into an account at one time.

Credit unions also have their cons. Some general ones include:

  • Limited eligibility. Not just anyone can join a credit union. You have to have some type of affiliation to the credit union.
  • Credit unions have lower account rewards than banks.
  • Credit union fees are on the rise.

In these areas, banks are better. Switching from a bank to a credit union, or a credit union to a bank, can help you with your finances. Contact me to learn more!