5 Common Myths About Credit Unions

Written by Christina Miller
Edited by Carly Simon-Gersuk

Popular belief about credit unions holds some fallacies that, while may have held some truth in the past, are no longer accurate. Some of these (false) reasons may even be holding you back from making the fiscally beneficial decision to ditch your bank for a credit union. It’s time to dispel the myths and understand that switching to a credit union does not mean sacrificing convenience.

Myth #1- Credit Unions Don’t Have Enough ATMs

While small credit unions may only have a few ATMs that they individually operate, most credit unions now offer access to an ATM network called the CO-OP ATM network. This broad system contains nearly 30,000 ATMs across all 50 states and 10 countries. You will find them in convenient places such as Costco, Walgreens and 7-Eleven, among others. With the ATM network, you don’t have to worry about fees and the accessibility of your money will never be an issue.

Myth #2- Credit Unions are Technologically Lacking

While the technology budgets of credit unions are certainly smaller than those of big banks, innovative and accessible financial software allows credit unions to offer the similar technological services as big banks. Nearly all have online banking services and many have mobile banking apps compatible with smartphones. Since technology is now one of the primary metrics for consumers in evaluating financial institutions, credit unions have made a huge effort to adopt the latest technology in order to compete with banks and satisfy their members. In fact, according to a 2015 Corporate Finance Institute satisfaction index indicated, “Banks scored a 79 out of 100 in customer experience versus 87 out of 100 for credit unions.” (1) Overall, credit union members were highly satisfied with their financial institutions and banking technology.

Myth #3- Credit Unions Don’t Have Convenient Branches

When choosing a financial institution, one of the most important factors to consumers is branch location. Historically, this has been the Achilles heel of credit unions that only have a few branches. However, just as credit unions utilize a cooperative network of ATMs, they also have joined together to share branches. With shared branching, credit unions share facilities to allow members to use a branch of another participating credit union to perform transactions, as if it were their home credit union.

Myth #4- Credit Unions Don’t Offer Rewards Programs

While many banks gain customers by offering miles, points, cash-back, and other perks, the problem is that those reward programs are associated with fees. By offering better loan rates, lower fees, and higher yields on deposits, banking with a credit union is more advantageous. For example, in an article on CreditCardInsider.com states that, “45% of traditional bank credit cards charge annual fees, only 10% of credit union credit cards do.” (2)

Myth #5- Credit Unions Don’t Pay Taxes

It is true that credit unions can be exempt from paying federal taxes because of their not-for-profit status, but they still pay local, property, and employer taxes. What do credit unions do with the money saved from not paying income taxes? They put the money right back into the organization and community! This allows credit unions to offer fewer fees, lower rate, and higher yields.

 

Written by Christina Miller
Edited by Carly Simon-Gersuk

 

Sources

1.Corporate Finance Institute, 2015,
https://cdncom.cfigroup.com/wp-content/uploads/CFI-credit-union-satisfaction-2015.pdf
2.CreditCardInsider.com, 2018,
https://www.creditcardinsider.com/blog/credit-union-credit-cards/