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Difference Between Credit Unions, Money Transfer Apps, and Digital Banks

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Many different personal financial service providers are available; however, not all are equal. So, what are the differences between credit unions, digital banks, and money transfer apps such as Cash App or Venmo? Let's dive in.

Credit Unions & Personal Finance

Credit unions offer the same financial services and products as banks, but they are not-for-profit financial institutions. Like banks, credit unions are also federally insured. The National Credit Union Share Insurance Fund insures deposit accounts for credit unions.

How Do Credit Unions Differ From Online Banks?

Several things make credit unions different from online banks. Credit unions are:
  • Member-owned – Being an owner, not just a customer, gives members a say in future direction of the credit union.
  • Community-focused - Credit unions join local charity fundraisers, offer startup and small business counseling, offer financial wellness education, and collaborate with other organizations on community improvement as a core mission.
  • Member-first - Members enjoy more personalized services and features. To join, you must meet the credit union's "field of membership," which is normally pretty easy.
  • Not-for-profit - Credit unions share profits with their members, not outside shareholders. They do this through higher savings rates, lower interest rates, and low to no fees.
Credit unions also offer the technology-driven experiences of an online bank, which operates without a physical presence. With online banks, customers use a website or mobile app to manage their finances.

Similarly, members of credit unions can do these activities through online banking. Paying bills, making transfers, reading statements, and even live chat are all capabilities online banking allows.

These account management features are also available with mobile banking through your smartphone and the credit union’s mobile app. In addition to these technologies, credit unions have physical locations to help members with their personal finance needs.

Comparing Services to Mobile Payment & Online Banks

Credit unions offer services in the "online banking" and "mobile banking" categories, aligning with what customers expect from digital banks. Even digital wallets such as Apple Pay and Google Pay are accessible.
Members can quickly link their debit or credit card for online and in-store purchases where these payment methods are accepted.

Mobile payment apps, like Zelle, are considered secure payment methods that allow you to send and receive money and pay online without entering your card details. Many credit unions have enabled these capabilities so their members can enjoy these benefits as well.

Benefits of Credit Unions

Credit unions focus on helping their members on their financial journeys, and there are several advantages to being a member, including:
  • More personalized financial services - The people that work at credit unions live in the same community as their members. Employees are often able to spend more time getting to know their members so they can offer more specific advice.
  • Membership to a socially conscious organization - Credit unions are part of the local community and play an active role. They may offer scholarships to students, donate to charitable organizations, and volunteer their time to certain causes.
  • Highly-rated customer service - With financial services that are more tailored towards their members' individual needs, the level of customer service is much higher than what you may receive from a digital or traditional bank.
  • Better rates - Profits are passed on to their members through favorable interest rates. Members often receive lower interest rates on loans and higher interest rates on savings accounts.
  • Lower or no fees - Credit unions may also offer lower fees than digital and traditional banks on accounts. They may even offer free checking and rewards accounts.
Physical locations with employees who can help members with financial questions are another critical feature of credit unions. For example, buying a house is a significant investment with a heavy emotional element. Working with a financial expert you're comfortable with and who can guide you through this process with personalized care is essential.

Remember, the functionality of online banking offered at a digital bank is the same as that you receive from most credit unions. The added benefit is that you get to work with a service provider based in your community.

Power Financial Credit Union Benefits You

Receive all the benefits of online and mobile banking offered by digital and traditional banks while working with a financial partner with your best interests in mind. Credit unions provide easy access to financial experts that will take your call and make time for a chat to discuss personal financial literacy concerns that matter to you! Power Financial Credit Union offers various checking, savings, and loans to fit your needs. Contact Power Financial Credit Union for more information.