The “great debate” of traditional banks vs credit unions shows no sign of slowing down. But while each side has its own argument, many people are discovering the benefits of using a credit union instead of a bank. Why are credit unions gaining popularity, particularly with business owners?
From a stronger sense of community to shareholder accountability, there’s a tangible difference in banking with a credit union – and that difference often surfaces in the form of dividends for individuals and business owners. When traditional banks come across unexpected or surplus income, customers rarely benefit. That’s not the case with credit unions; whenever a credit union receives extra profit, shareholders (credit union members) receive the income as dividends.
The Credit Union Advantage for Business Banking
Let’s look at some different ways a credit union offers business owners and entrepreneurs a decided advantage for banking needs:
Small businesses can make hundreds of transactions every day. Many banks charge a flat fee for business accounts, while others charge owners on a per-transaction basis. Credit unions tend to offer drastically discounted fee rates, and often waive some fees altogether. Jeff Haden, a financial writer, experienced the advantage of banking with a credit union first-hand. Mr. Haden saved over $1,000 per year by banking with a credit union, simply by making the switch. Mr. Haden saved the most money with lower banking fees and credit card expenses, two cost sectors which also apply to business owners.
Entrepreneur-Friendly Lending and Support for Local Businesses
Credit unions are great for small business and entrepreneurs, and the secret is finally getting out. Small business loans are increasingly originated with credit unions instead of traditional banks. According to a recent study, Wisconsin small business loans from credit unions have increased by nearly 75%, while loans from banks are up less than 2%.
The Ownership Factor
We’ve already touched on this topic, but it bears an in-depth examination. At the end of the day, credit unions operate on a “for the people, not for profit” model. Extra dividends are just one slice of the pie. Shareholders have a say in which policies a credit union enacts, with the most benefit for the greatest number of members. This “all for one, one for all” mentality follows through to the surrounding community. Speaking of which…
When a business owner banks with a credit union, the benefits reach far beyond the bottom line. Many credit unions are active in the communities they serve, and this helps local businesses and consumers alike. Mission Fed, a popular credit union in the San Diego area, boasts a busy community support system, including a Mission for Nonprofits Program, the Mission Federal ArtWalk, and plenty of other sponsored events. Mission Fed has made proactive community engagements in San Diego since they were founded in 1961, and many credit unions do the same!
While regular banks still have some value for business banking, credit unions deserve strong consideration for any business’s primary banking source. Has your business made the switch from a regular bank lately? Have you noticed any benefits? What are some of the unexpected advantages of using a credit union instead of a bank? Drop us a line in the comments section. Thanks for reading our blog!