It’s not always easy choosing the right bank for your lifestyle, what with varying interest rate offers, perks and benefits. Then when considering another alternative, credit union, the possibilities are even more vast.
Last year the FDIC listed 4,715 banks in total in the United State, all with varying pros and cons to weigh. When thinking about whether a credit union or a bank is best for you and your family, it’s important to become as informed as you can about which offers what, and how it can benefit your journey to financial empowerment. It’s little known, but in some cases, credit unions can be the option you need level up your money goals. Pete Amstutz, Senior Vice President of Savings and Membership at Navy Federal Credit Union explains why.
The Key Difference Between Banks And Credit Unions
Amstutz explains that a primary difference between credit union members and bank customers is that members of credit unions are part-owners of the organization.
“That means credit union members have a unique relationship with their financial institution. As member owned and not-for-profit, credit unions can focus on the long-term benefit of their members, which is opposite to many public institutions targeting short term quarterly financial results. Members are also part of specific communities that credit unions serve.”
He continues: “In our case, that’s Active Duty military, Veterans and their families. We share a common bond of service with military members and their families. Because of this, we’re keenly focused on helping our members achieve life’s biggest missions, such as saving for the future, buying a home and protecting their best interests. Being closely aligned with our members’ values allows us to be their financial partners—providing the insights, services and products they need. Whether it’s a bank or credit union, you’ll want to figure out how each one matches up with your lifestyle and financial priorities. For example, consider features such as number of branches and ATM locations, rates, fees, mobile and online banking capabilities. We know military members and their families lead busy lives between daily routines and being on the move every few years for deployments and changing duty stations. Having one financial institution managing their accounts can alleviate stress and confusion. Similarly, when servicemembers transition to civilian life, they may face challenges finding the right city, buying a home and finding the right job. Our Military Life resources help members navigate each stage of their financial journey as smoothly as possible.”
How are credit unions able to offer lower interest rates compared to banks
Typically banks are less competitive than credit unions in terms of interest rates in mortgage lending and savings accounts. For instance, as of March 31, 2023, the national average rate for a one-year certificate of deposit with $10,000 was 2.28% for credit unions and 1.74% for banks. Navy Federal is an example
“Since we’re member-owned and not-for-profit, any surplus of funds are returned to our members as dividends, lower rates and fees on lending products, exclusive discounts and improvements to our services.”
He goes on to point out that Navy Federal members can earn and save an average $461 per year as compared to banking with other financial institutions.
There has been an uptick in interest around Navy Federal membership—why is that?
Thanks mostly to word of mouth, Navy Federal has grown leaps and bounds in recent years. Per a recent report from Banking Dive, the $170.8 billion-asset institution added more customers last year than all but nine credit unions count in total membership.
“We’ve grown responsibly by staying true to ourselves, serving a field of membership that shares the common bond and values of military service. Our growth is fueled by several factors—mostly notably is word of mouth and the role our members play as our advocates. We know from our research that members share the benefits of joining with their friends and family. It’s a testament to the value we provide to our members. Another aspect is our commitment to caring for the whole wellbeing of members and championing the communities where they live, work and serve. In fact, of our 355 branches, 175 are on or near military installations.”
Have you considered banking with a credit union?