At first glance, banks and credit unions can seem so similar that people may not recognize the differences between them. After all, both offer checking and savings accounts, loans, mortgages, and wealth management, among other services and products.
But when you take a closer look, you’ll notice a distinctive difference between credit unions and banks when it comes to rates and dividends. Here’s why.
Members are a key ingredient
Credit unions like Cobalt CU are able to offer higher dividends than banks because the structure of the financial institution allows more money to be diverted to members rather than a board of directors and stockholders.
Because they’re focused more on member services than on profit or any larger company goals, credit unions tend to have lower interest rates, higher dividends, and fewer fees. That’s great news for anyone hoping to borrow or open a dividend-bearing account.
What to keep in mind
When deciding between a bank and a credit union for an account or a loan, take a close look at rates and dividends to make sure there are no hidden fees that will affect the comparison. Also, it’s worth considering other aspects of the bank vs. credit union equation, including any added benefits. For example, a credit union might offer discounts for making automated payments on a loan, and a bank may not.
Additionally, if you’re already a member of a credit union, you can benefit from your established relationship. That’s because credit unions often take member history into account.
In general, credit unions are driven by members and always will be. In fact, members are partial owners of the organization and even have voting rights. Dividends and rates are part of the member-driven not-for-profit structure, and that’s one of the major reasons many people join a credit union. When you choose to join a credit union, you know you’re joining an organization that’s designed with your needs in mind, even when it comes to interest rates and dividends.
For more information about Cobalt CU’s financial services, make an appointment for a wealth management consultation today.