The Bank Vs Credit Union Wars

If you hadn’t noticed, there is a groundswell of people becoming very anti-banking these days. Who could blame them? The banks are very financially healthy right now while average Americans are not. Ambitious people want to make a better life, but in most cases can’t get the financial help they need from their local banks. In steps the credit union.

Credit Unions have been around for a long time, but within the last few years, they have taken larger market share away from banks. This has not gone un-noticed and banks are fighting back. In fact, it’s really become an all out war between the two institutions for your hard earned money. At this point, I think it’s safe to say that the credit unions have a distinct advantage for the following reasons:

1) They were never heavily involved in risky loans in the real estate market and as such, they never really experienced huge highs or huge lows. When the crash came, most credit unions were doing just fine.

2) Credit Unions do not have the bad reputation that banks have earned over the last few years.

3) Credit Unions have built their business model with one sole purpose, which is to provide low rates, higher yields, fewer fees and most of all, the feel of small town customer service.

4) Credit Unions today are getting more competitive with banks. For instance, I ran into a local credit union that will do home loans for people just one year out from a short sale. Most large banks won’t even consider a loan to an individual who had a short sale until two years and even then, it’s iffy.

So what’s the difference between a credit union and a bank? Credit unions are non-profit organizations, and as such, they enjoy favorable tax treatment. They then can pass along that savings and benefits to their customers as I mentioned in point number three above. Credit Unions are made up of members that pool their money. The institution then loans that pool of money. The members have a say in how the union is operated which ensure customer friendly business practices and loans. Profits from the credit union are returned to the members. Credit unions usually require customers to belong to a certain company or geographic area.

The down side of credit unions is that they are not as large as commercial banks, can’t always provide services in every state, nor do they have an ATM on every corner. Their online services may not be as robust and their customer service may not be 24/7.

The bottom line is credit unions are becoming bigger players in the home loan business, and if you are fed up with traditional banking, this might be an excellent alternative.

Dan Polimino is an Owner/Broker with Keller Williams Realty DTC. He can be reached at dan@coloradodreamhouse.com  and www.coloradodreamhouse.com/denverpost

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