This Year's Banking Trends Point To Credit Unions
The trend for banks in 2017 is profit, profit, profit. The FDIC reports that 2016 was a great year for the American banking industry, which pulled in a net income of $43.7 billion in the fourth quarter of 2016. That makes the third year of record industry growth, with bank profits higher than ever. And though you may not realize it, that's a great reason to join a credit union.
Banks are businesses
Those record numbers are great for banks' shareholders, because banks are businesses whose goal is to turn a profit. And as a customer, you're what the bank is extracting profit from. If you shop around, you're likely to find that banks have more fees, higher loan interest rates, and lower savings interest rates than their credit union counterparts.
That's because credit unions are different. They're not-for-profit organizations that aren't beholden to shareholders, but to the individuals who trust the credit union with their money. When you open a share/savings account or get a loan with a credit union, you aren't just a customer: you're a member.
What credit union membership means
Credit unions aren't beholden to shareholders but to their members. Joining a credit union means getting partial ownership. Credit unions have a volunteer board of directors that manages the credit union, and every member gets a vote to decide who's part of that board.
And while credit unions also don't let just anyone join — they may serve a specific industry— it may be easier to join than you think. PenFed, for example, serves government employees and members of the military, as well as their families. If you fall into one of these groups — known as the field of membership — you can open a PenFed account immediately. But if you don't fall into the field of membership, you can also join via membership with the National Military Family Organization or Voices for America's Troops by making a one-time only, non-refundable payment. PenFed does not profit from any of the money that is collected. 100% of your membership fee goes directly to the aforementioned unaffiliated charity that you select.
You will also be asked to make a $5 deposit into your share/savings account to establish your membership. That deposit is yours to withdraw should you decide to cancel membership. That makes it simple for anyone to join and enjoy the benefits of credit union membership.
Credit unions' not-for-profit mission
Banks are in business to make a profit, but that's not the goal of a credit union. Because credit unions like PenFed are member-owned, everything they do is for their members. Instead of focusing on profit, credit unions return that money to their members by offering lower fees, lower loan interest rates, and higher savings dividend rates. It can really pay to be part of a credit union where you're a member rather than a customer.
Technology makes it even easier to access your credit union
One advantage big banks have over credit unions is the ability to have a branch location at every street corner. Credit unions tend to have a smaller footprint, and you may be concerned that you can't access your money without a bank branch nearby. But with technology making it easier than ever to bank on the go, you can access your credit union no matter where you are.
Many credit unions — including PenFed — offer apps that let you check your balance, make deposits, and even find the nearest branch or ATM if you need one.
Join PenFed for a better banking experience
We think you'll appreciate our low fees and great rates. Opening a savings account or CD offers better-than-bank interest rates that can help your savings soar.