Banks vs. Credit Unions: By the Numbers

Are you getting gouged by fees and feeling frustrated by the service you receive at your bank, but still not certain that a credit union is a better option? Let’s break it down by the numbers and see if you still aren’t convinced.

If you are looking for a reward credit card, the average interest rate you will pay at a bank is 17.25% (1), but if you head to a credit union your average rate drops to 9.65% (2). Note that while credit unions do not usually offer rewards, points or cash-back deal credit cards, the reward is lower rates. A 4-year used auto loan runs an average of 5.44% at a bank, but at a credit union runs 3.50%. A 4-year new auto loan averages 4.99% and 3.32%, respectively. A 15-year home equity loan is 3.36% at a bank and 3.23% at a credit union (3). A 36-month personal loan averages 10.31% at a bank, but only 9.46% at a credit union (4). By law, federal credit unions’ personal loan interest rates cannot be higher than 18%, and state credit unions have interest-rate limits set by the state.

If you are looking to make the most interest on your money, a credit union is the way to go for savings accounts, checking, money market deposit accounts and CDs. The average credit union personal savings account will make as much in interest at 0.16%, than the same account at a bank earning 0.14%. Credit union 1-year CD earns an average of 0.95% interest, while at a bank a 1-year CD will only earn an average of 0.63% (3).

Are the cold, hard cash benefits of a credit union not enough to sway you? Surveys consistently show that credit unions offer much better customer service than banks. The Financial Trust Index from the Chicago Booth/Kellogg School found that by the end of 2015, trust in national banks was at 33%. However, trust in credit unions was nearly double, at 62% (5). According to a survey in 2017 by Corporate Finance Institute, consumer satisfaction with credit unions has remained well above the bank average since 2012. Credit unions’ score in 2017 was 87 on a scale of 0 to 100, while banks scored 79 (6).

The stats don’t lie. Whether you are seeking a loan, credit card, checking account or more personal service, credit unions consistently out-perform banks.

Sources

1.CreditCards.com, May 2020,
https://www.creditcards.com/credit-card-news/rate-report.php
2.CreditHuman.com, May 2020,
https://www.credithuman.com/Credit-Card-Rates/Rewards-Cards
3.Nation Credit Union Association, March 2020,
https://www.ncua.gov/files/publications/analysis/credit-union-bank-interest-rates-march-2020.pdf
4.Lincoln SDA Credit Union, April 2020,
https://www.lincolnsdacu.org/2020/04/20/the-credit-union-difference-a-look-at-loan-interest-rates/
5.Chicago Booth/Kellogg School,
http://www.financialtrustindex.org/resultswave24.htm
6.TheStreet.com, June 2018,
https://www.thestreet.com/personal-finance/credit-unions-vs-banks-14626262