Saving money is an essential part of achieving financial stability and security, but sometimes unexpected expenses and rising living costs can make it challenging to save as much as you would like. In these situations, as a freelancer, you ought to ponder all available credit options on the table, and loans from a credit union can be a useful tool in helping you tackle living costs while still being able to save. 

Compared to commercial banks, credit unions offer more favourable terms and rates for loans, making them a more affordable and accessible option for many individuals. Credit unions are not-for-profit organisations, owned by their members. Banks, on the other hand, are for-profit organisations, owned by shareholders. As a member-owner of a credit union, you have a say in the institution’s operations and can elect the board of directors. 

The main differences to take into consideration when deciding which to choose are:

Fees and Rates

As mentioned above, credit unions are known for their lower fees on loans and higher interest rates on savings accounts compared to banks. Because credit unions are not-for-profit, they can pass savings on to their members in the form of lower fees and better rates. Banks, on the other hand, have shareholders who expect a return on their investment, so they charge higher fees on loans and offer lower rates on savings. 

Services

Both credit unions and banks offer a wide range of financial services, including savings accounts, checking accounts, loans and credit cards. However, banks may offer more services and options, such as investment accounts and business loans. Credit unions may have more limited services but may offer more personalised attention to their members. 

Membership requirements

To become a member of a credit union, you must meet certain eligibility requirements, such as living in a particular geographic area or being a member of a specific group, such as a labour union or military organisation. Banks do not have membership requirements, so anyone can open an account. 

In conclusion…

By getting a loan from a credit union, you can potentially save hundreds or even thousands of pounds in interest and fees over the life of the loan, which can be a significant boost to your overall financial health. Additionally, credit unions often offer more personalised attention to their members, so you may be able to receive more guidance and support in managing your finances. 

Of course, it’s important to remember that taking out a loan should be done with caution and consideration. You should only borrow what you can afford to repay, and make sure to carefully review the terms and conditions of any loan you are considering. Nonetheless, credit unions can be a valuable resource for those looking to tackle living costs while still being able to save, helping you achieve your financial goals in a more affordable and accessible way. 

Written by Gabriel De Oleo from Bankish, providing tailor-made software solutions the world of finance deserves.