Many people simply refer to their financial institution as a “bank”. Did you know, though, that there are both banks and credit unions available as financial institutions? There is a significant difference between the two that this article will explore. We will introduce what makes credit unions, like HFS Federal Credit Union, special in the financial world.
What is a Credit Union?
A credit union is a type of financial institution that is commonly known for serving those who share a common bond; a type of cooperative. Credit unions are nonprofit organizations, which typically allows them to offer lower loan rates and higher savings rates to their membership, as well as charge less fees.
Benefits of Credit Unions
Becoming a member of HFS Federal Credit Union comes with lots of perks, such as:
- Community Presence: By becoming a member of HFS FCU, you’re supporting an organization that supports your community. The credit union serves the community through financial education offerings, participation in community events, and donations and sponsorships to local organizations.
- Personalized Member Service: At a credit union everyone shares a common bond, whether it’s a workplace or the community that you live in, so you’re much more than just a member. You are ‘ohana and we treat you that way.
- Lower Fees & Higher Savings Dividend Rates: Since credit unions are nonprofits they can use their “profits” to benefit their membership. This is typically done with lower loan rates, higher savings rates and little to no fees compared to banks. Visit our website to check out the latest savings and loan rates here at HFS FCU.
How is a Credit Union Different from a Bank?
Although banks and credit unions have similar product and service offerings and use the same financial language, they are not the same. Below we will provide the top differences between the two so that you can tell them apart. Here are a few ways they’re different:
- Ownership: Credit unions are nonprofit organizations, which allows them to put their focus on their members’ needs. Members of credit unions are essentially the owners. Banks are for-profit institutions and will often have stockholders that own portions of the business and share in the profits.
- Who Can Join: At HFS Federal Credit Union you have to qualify for membership. At HFS, anyone who lives, works, worships, goes to school, volunteers, etc. on the Big Island qualifies for membership. Other credit unions may have different requirements to join such as working at a certain company, living in a particular town or other common bonds. Banks can accept anyone as a customer who wants to do business with them.
- Product & Service Offerings: Banks and credit unions typically offer many of the same products and services, however it can depend on the size of the institution. There are many smaller credit unions that may not have as many offerings as a big bank, however HFS FCU is the largest credit union on the Big Island and offers a robust array of products & services.
- Online Services: Credit unions offer a variety of online services as well that compare to what banks offer. This includes online banking, online bill pay, mobile check deposit, a mobile app, etc. HFS FCU offers all of those things and more, making it easy to manage your finances on the go.
- Interest Rates: As we’ve mentioned earlier in the article, interest rates vary between credit unions and banks because of the nonprofit versus profit status of the organizations. Since credit unions are nonprofits they typically offer lower interest rates on loans and higher dividend rates on savings accounts.
- Fees: Credit unions and banks both have fees for various products and services, however credit unions tend to have less fees and where there are fees, they usually are lower than those at a bank.
- Locations: Location availability for banks and credit unions vary widely and depend on the size of the organization. Generally banks are larger institutions that span wider areas. This often means they have more availability when it comes to location. Credit unions, because of their membership requirement, often have less physical locations or are limited to a certain geographic area. If the ability to visit a physical branch is important to you pay close attention to the bank or credit union’s location availability. If you rarely need to see someone, online services have made this feature less important for many.
Benefits of Banks
Banks also offer several benefits as well, which are outlined below:
- National/Worldwide ATM Network: Banks often have access to a much larger ATM Network, which means there are more places for you to withdraw money without having to pay a fee. HFS FCU actually partners with Bank of Hawai‘i to give members access to a larger ATM Network. That means any HFS debit or share card can be used at a Bank of Hawai‘i ATM, surcharge free.
- Several Locations: Banks typically have more locations, allowing better ease of access to physical locations for their customers.
- Business Banking: It is common for banks to have a more robust business banking program compared to credit unions.
- Credit Card Programs: Although credit unions often have lower interest rates on their credit cards, banks will usually have stronger overall programs when it comes to rewards and incentives for usage. Banks also have multiple credit card programs and credit unions are likely to have just one.
Frequently Asked Questions
Do credit unions follow the same rules as banks?
Credit unions do not follow the same rules as banks. They follow guidelines set forth by the National Credit Union Administration.
How do I switch from a bank to a credit union?
If you are looking to join a credit union, the first thing you’ll want to do is find a credit union in your area that you are eligible to join. Remember, credit unions have eligibility requirements, but changes are there are multiple credit unions you can be a part of that extend eligibility to residents of your area. Contact the credit union you choose and inquire about opening an account. They should be able to assist with any logistics surrounding switching over your account from a bank to the credit union.
Is my money safe in a credit union?
Yes, your money is safe in a credit union. At a credit union your money is insured, up to $250,000 by the National Credit Union Administration.
Become a Member with HFS Federal Credit Union
If you are interested in becoming a member of the HFS Federal Credit Union ‘ohana, contact us today at (808) 930-1400 or (800) 216-2666 toll free or visit any of our 6 branches island wide. You can also open your account online from the convenience of your home. For more information about our membership requirements, visit us on web.