For many young adults — the groups people today often refer to as “millennials and Gen Z”— the idea of a credit union as part of their money management strategy can be confusing. After all, what is a credit union exactly? Is it a bank? Do credit unions issue credit cards? Don’t you have to pay to join a credit union? Aren’t all financial institutions alike—money in, money out?
The short answer is a resounding no. No, all financial institutions are not alike. No, you don’t have to pay to join. Membership is inclusive rather than exclusive, and credit unions like La Cap are often a far more advantageous choice for you than a bank. Here are three reasons why credit unions are better fit for young adults.
While banks structure transactions so that your actions profit the top echelons of the bank, credit unions want you to make wise decisions that will benefit all of the credit union membership—including you.
Motivation is everything, so you need to ask yourself why a bank encourages you to do something or makes a certain type of transaction so easy. That’s usually because they make a tidy profit to keep their executives happy with high interest. Those earnings come from sources like credit card and loan interest, bank investments that tie up your money and fees for everything from mortgages and loan processing to penalties for foreign ATM transactions.
Yes, credit unions still charge interest on loans, invest and have fees for some services. However, borrowing rates are lower than those at banks, fees are far more lenient than those at banks, and checking and savings dividends are higher than those at banks. Why? It’s because a credit union’s earnings go toward providing more and better services, and that often includes more favorable terms and dividends for all members — even young people who don’t yet have as many assets. When you’re just starting out, a little help from your financial institution can go a long way.
While banks showcase their products and services from a selling and marketing perspective, credit unions focus resources on educating members about how to manage money for the members' own benefit — financial literacy.
Why did the major US banks spend $13 billion last year on marketing? Some ramped up their marketing spending by as much as 30 or 40 percent, and the top five spenders invested over $1 billion in marketing their products. Meanwhile, banks’ marketing spending consistently outranks the minimal amounts that they invest in financial education — by as much as 25 to one according to Consumer Financial Protection Bureau figures. Banks are spending a lot to convince you to spend on their financial products.
In contrast, the Federal Credit Union Act dates to the Great Depression. It created credit unions as non-profits designed specifically to promote thrift and to offer people who needed credit for “productive purposes.” Since then, credit unions have focused on establishing community-based relationships with their members to encourage financial literacy and wellness. Credit unions actively teach members better money management techniques and essentials for planning out successful financial futures. At La Capitol, we invest precious resources in educating you on how to make good financial decisions so that you can grow wealth and protect it throughout every stage of life—starting now.
While banks promote luxurious extras that you’ll be paying for, credit unions offer those perks in addition to focusing on real banking services that actually help you save by offering favorable terms and significant dividends to ordinary members just like you.
If you allow an institution to hold your money, those funds should do more for you than just sit. With a credit union like La Capitol, imagine being able to earn above-market dividends that are compounded and credited monthly on both your checking account and your savings account. With each month, you can accrue dividends on your new total for a balance that continues to grow.
Meanwhile, you can still enjoy the financial features that are important to you — essentials like online and mobile banking, smartphone pay and low-interest credit cards with rewards. You have easy access to great loan terms for mortgages, cars and personal needs as well as perks like fee waivers and more. When you entrust your money to a credit union, you can borrow for less, save more, earn more and even tack on nice extras.
Your financial life can be richer and more secure simply because you’re a member. You belong, and by belonging, you’re also investing in a not-for-profit financial institution that benefits an entire community.
Credit unions were created to help their members save hard-earned wages and to offer those members loans with fair and reasonable terms that let them achieve their dreams. Come see what La Cap has to offer, and put your money where it can grow.