People often talk about why banks are a bad place to keep your money. They charge lots of fees and have notoriously bad customer service, but there are benefits and drawbacks to both big banks and local credit unions that are important to consider.
Benefits of a Big Bank
Convenience
Big banks give one thing better than anyone else, convenience. They have lots of locations, usually around the country, so you can get your banking done wherever you are. They also usually have lots of free ATM locations that you can easily get to.
Products
Another big benefit of big banks is that they offer lots of products. They have checking, savings, CDs, credit cards, mortgages, car loans, and any other bank offering you could want. Many also have investment and retirement accounts too.
Downsides of a Big Bank
Customer Service
If you ever had a question for your big bank, good luck getting help. Their phone systems are mazes designed to keep you from speaking to a real person. Their employees are rarely well trained and are encouraged to say to and prevent you from speaking to managers. They know they make more money when they quickly push you away, so they do their best to make money rather than help you.
Fees
Big banks are well known for screwing people and charging huge fees. You might get a horrible interest rate on your account and get slammed with a $25 fee if you do anything the bank doesn’t like. You can usually get fees waived if you ask nicely, but there are so many fees to look out for, you might get hit when you are not expecting it.
Benefits of a Credit Union
Customer Service
Sometimes you want to go where everybody knows you name. That is not just a line from a song about a bar, it is often true with credit unions. Credit Unions serve fewer customers and focus on customer service, so they generally go above and beyond what a corporate bank would do to make you happy.
Rates
Credit unions are not-for-profit entities, so they do not screw customers to get a bigger bottom line. Interest rates are generally better for customers at credit unions. As a bonus, they also have lower, if any, fees for most checking and savings accounts.
Downsides of a Credit Union
Product Offerings
With smaller size comes smaller offerings. Most credit unions offer standard banking and loan accounts, but don’t usually have the depth of offerings that commercial banks have. They also have fewer customization options than large banks.
Locations
If you want a free ATM wherever you go, credit unions are probably not your best choice. While many credit unions work together and have a free ATM network, there are still fewer options than the biggest banks.
What is Right for You?
A bank is right for some people, and a credit union is right for others. I closed my big commercial bank account and now use a combination of an online only bank and a local credit union.
What do you think is best? Do you have any questions? Please let me know in the comments.
Image by edenpictures / flickr
Eric
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