This blog post was originally published by Alyssa Davies on mixedupmoney.com.
When we’re young teenagers, our parents will often help us set up our first bank accounts. Typically, they’ll open your account at the same bricks-and-mortar institution that they use for their financial situation. But, that bank may not be the best option for you. So, instead, consider looking at all of your options, including credit unions.
Credit unions are very similar to banks, but the main difference is that they are not-for-profit organizations whose mandate is to focus on customers first. Rather than seek a profit, like most traditional banks, credit unions’ goal is to provide the best possible products and services to consumers.
Any profit earned by credit unions will go back into the community, its members or the organization’s growth. Although they are smaller than your typical bank, they are a fantastic option for anyone looking for a more socially responsible banking option.
First of all, I know it can feel daunting to switch banks and make a significant change to save your money. That’s why, rather than do all of the paperwork before you know what option is best for your family, it’s okay to do both.
Why are credit unions an excellent option for your savings goals?
As you know, banks often come with a hefty side of fees. Whether it’s a cost to keep your money stowed away in your checking account or a service fee for using their ATMs, it can feel like you’re spending most of your family’s hard-earned money just to use their services.
Credit unions are a great option because they have little to no fees for most of their products. Best of all? According to Alberta Credit Unions, you can find a massive network of surcharge-free ATMs across Canada to help avoid fee gouging.
Whether your savings goals are short-term or long-term, you can take advantage of all the same kinds of products you would find at a traditional bank, such as investments, retirement savings plans, credit cards and loans. The difference, though, is that, unlike a bank, they won’t sell you products that you don’t need just to hit a commission goal.
Do you really need more than one financial institution?
When it comes to money, two common questions readers ask are whether or not it’s necessary to have more than one bank account and whether it’s okay to have those bank accounts open at multiple financial institutions.
In most cases, my answers are always the same. Having more than one bank account can help you categorize your financial goals and have a clearer picture of where you stand. Having multiple financial institutions can be beneficial depending on your needs as a consumer.
For instance, having multiple high-interest savings accounts is my favourite way to save money. It allows me to attach a nickname to each account, set up automatic transfers into each account, and track my goals individually, rather than putting all of my savings into one place.
As for multiple financial institutions, this is another area that I use to my advantage. Some institutions have lower fees, like credit unions, and also better options for savings tools. However, there is nothing wrong with opening accounts at separate institutions so long as you can:
Remember where each of your accounts is open
Access them regularly to ensure there is no fraudulent activity, and
Feel like they are working for your financial goal-setting.
How do you find a credit union that works for you?
Just like you would at any bank, becoming a member of a credit union is as easy as opening an account and purchasing shares for a small fee.
Although purchasing shares can sound intimidating, it’s the opposite with a credit union. All this means is that you become a member of the institution, as well as an owner. In addition, you receive profit shares on any earnings, which can help your savings goals go even further.
Opening an account or adding a product to your portfolio can be done online or in-person at any of their branches, and with nearly 200 branches in Alberta alone, you’re sure to find a perfect fit.
Having more than one financial institution for your banking needs can allow you to take advantage of lower fees, higher interest options without leaving the security of your current institution.