Being a student is already stressful enough and right now is an especially stressful time because of the covid-19 pandemic. That’s why it’s important to get every advantage you can, including financial advantages from whatever institution you use to hold your money.
Many students don’t know this, but using a credit union can bestow considerable benefits over many of the big banks.
Most students headed to college are using their first checking accounts and credit cards and may not be aware of the fact that you don’t have to use one of the big national banks. Campuses regularly offer credit union promotions that feature incredible rates on student loans and car loans.
As long as you keep your head up, you’re almost sure to see a promotion for one of your local credit unions. Once you do, jump on it because they will be better long-term financial partners.
Here are 5 reasons why credit unions are better options for college students:
Lower loan rates
If you do decide to take out a student loan from a credit union, you’re pretty likely to get a better rate than you would from a bank. Car loans, home equity lines, and mortgage rates from credit unions are all consistently lower than banks, so it stands to reason that your local credit union will have a better student loan for you.
Better savings rates
Being as how this may be your first checking account, which could turn into a savings account, CD, or money market account, you want to make sure you’re getting the best possible rate you can. And that’s one of the glorious features of a credit union: they’re designed to circulate money through their communities. So, you’re likely to get more interest off your savings account in a credit union than a bank.
Less predatory credit cards
Bank-issued credit cards are traps that can easily lock young people into a lifetime of debt. While it’s important to be responsible with credit cards no matter who issues them, credit unions offer cards that are often a full 2 percent lower than banks. So if you end up running a debt on your card during college, you will owe less if you use a credit union.
Getting a loan in the first place
Let’s not rush past this loan thing. Loans are not necessarily easy to get. If you have good credit, you’re far more likely to get a “signature loan” from a credit union than from a bank. Also, credit union small business loans are typically better as well. So if you plan to start a business in college, it’s better to use a credit union.
But you’re far more likely to get a small business loan at reasonable rates with a credit union than a bank. Credit unions are looking to make that rate better, too. Currently, credit union business loans max out at 12.5 percent of assets, but that’s a number that could shift in the coming years.
Conversely, banks are known to hold business owners’ feet to the fire over relatively small loans.
Customer service
Perhaps one of the most compelling reasons to use a credit union over a bank is the level of customer service offered. Banks are not about community, whereas credit unions are specifically tailored to their communities in a profound way.
This is especially true for new college students who could use a hand in learning the ins and outs of banking. You don’t need a banker trying to sell you on some high-interest credit card; you want a credit union guiding you on how to best save your money and invest in your own future.
Many of the most popular banks are giant multinational corporations that are not tuned into local communities. Credit union representatives, on the other hand, come from your community and are specifically trained to coach you on how to best manage your money. They’re not looking for profits; they’re looking to help their fellow community members.
There are a plethora of reasons for college students to use credit unions over banks, including free student checking, lower and sometimes inexistent overdraft fees, plenty of ATMs on campus and zero service fees on those ATMs, etc.
Generally speaking, credit unions are a good way for college students to create and leverage their first checking accounts, savings accounts, credit cards, and loans as educational opportunities instead of being taken advantage of by big banks that treat them like numbers instead of people.
