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Which is Best for Debt Relief?


In 2011, several large commercial banks began charging fees that many people considered excessive. Bank of America, for example, announced a $5 monthly debit card fee on September 29th of that year.  

Despite the bank’s fee cancellation on November 1st, the Credit Union National Association (CUNA) reported that credit unions had received 440,000 new customers and $4.5 billion worth of investments during the same period. 

As a result, National Bank Transfer Day was created. During this unofficial holiday, people were encouraged to ditch big banks and shred their credit cards—and millions of them did just that. 

Perhaps you were one of the people who made this move. If not, you might be wondering whether you should switch to a credit union or stick with your current bank(s). Let’s compare the two to help you make an informed decision. 

The advantages and disadvantages of a big bank 

Many physical branches and ATMS 

One of the most substantial advantages of big banks is their accessibility. They typically have more branches and ATMs than credit unions that are located at the bank itself, shopping centers, gas stations, railway stations, and grocery stores.  

In addition to convenience, many people want the option of withdrawing their cash and speaking with a bank teller in person. If someone has a complicated question or wants to open an account, they could find it easier to work with someone on-site. 

 However, most banks do offer online conveniences as well. So, if you prefer dealing with your finances from home on your laptop or phone, visiting in person, or a combination of the two, a physical bank could be your ideal option.

A broad selection of financial products and services

  • Banking products and services include a wide range to choose from including:
  • Checking and savings accounts 
  • Credit and debit cards 
  • Loans 
  • Investment products 
  • Financial advisory services 
  • Insurance products 
  • Foreign currency exchange 
  • Wire transfers 
  • Direct deposit  

Account fees 

Banks are notorious for loading fees onto checking accounts. This can include anything from monthly “maintenance” to overdraft fees. According to a survey from MoneyRates.com, the average monthly maintenance fee among accounts that charge these fees is $12.08. 

In addition, many banks charge fees for using out-of-network ATMs. While banks often charge non-customers $1.50 to $3.50 for ATM usage, non-bank ATMs can charge up to $10 per transaction. 

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The advantages and disadvantages of a credit union

Very few physical branches and ATMS 

Credit unions are designed to serve local constituencies and are rarely available outside of their area. Most have no ATMs except for one near or inside its offices. However, they often reimburse fees incurred by customers who use “out of network” machines. 

So, if you belong to a credit union, you could use just about any ATM anywhere for free. If you are responsible for the fee, some credit unions cap how much they reimburse – generally about $10 to $20 a month. 

A limited selection of financial products and services

Credit unions tend to stick with a few core offerings, such as deposit accounts, credit cards, and loans. Since they are smaller than banks, there may also be fewer credit card options and reward programs. 

Better rates 

Credit unions generally offer higher-yielding checking and savings accounts than banks, along with lower interest on loans and mortgage rates. 

Account fees 

Credit unions are able to charge minimal fees because they operate as a not-for-profit. Their checking accounts don’t require a minimum balance or charge a monthly service fee.  

You will also avoid fees by using an in-network ATM. If you do use an out-of-network ATM, you will be charged a fee ranging between $1 to $5. Most also charge overdraft fees for purchases that exceed the amount in an account.  

Customer service  

A positive for big banks is their superior customer service, scoring a 78 on the American Customer Satisfaction Index.  

On the other hand, credit unions scored a 75—a 1% decrease from the previous year. While both have satisfactory levels of customer service, a credit union may offer more personalized assistance than a large bank simply due to its smaller size.  

Which is the better option? 

In comparison to banks, credit unions are typically smaller operations. They are owned by their members and pass their overheard savings to themselves, which usually translates into fewer fees for customers.  

In fact, more than 70% of the big credit unions offer free checking. On the other hand, only about 40% of banks do so.  

Making the right choice 

Big banks might offer a huge array of products but in some cases, credit unions are hard to beat. Most financial experts say that if you can get past the lack of ATMs and physical branches, they can be the best alternative to banking today.  

If you look at their fee structures, opening a savings or checking account at a local credit union can be worth it. But if the convenience of using a bank and speaking with someone in person is more important, you may be better off sticking with that. All in all, it’s a matter of preference. 

Content Disclaimer:

The content provided is intended for informational purposes only. Estimates or statements contained within may be based on prior results or from third parties. The views expressed in these materials are those of the author and may not reflect the view of National Debt Relief. We make no guarantees that the information contained on this site will be accurate or applicable and results may vary depending on individual situations. Contact a financial and/or tax professional regarding your specific financial and tax situation. Please visit our terms of service for full terms governing the use this site.

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