Financial difficulties can be a major source of stress, especially if those difficulties linger or become chronic. Fortunately, for credit union members, financially difficult times can become less of a burden as credit unions are owned by members and dedicated to increasing their members’ financial health. Here’s how:
Credit Unions Are Designed to Support Members
Credit unions are non-profit and owned by members, so you can feel confident knowing members are always the top priority. Because banks are for-profit institutions, it’s impossible to guarantee whether they have your best interest in mind. When you work with a bank, the customer service you experience might be hindered by the aim for profit.
Working with a credit union means you don’t have to be concerned about whether profit goals are getting in the way of your experience. This becomes especially important during financially difficult times when you need your financial institution to offer support.
Tips for Working with Your Credit Union During Tough Times
There are many ways your credit union can help you during financially difficult times. Here are some tips to help you navigate a financially stressful situation while getting support from your credit union.
Understand, but Don’t Rely on Overdraft Options
It’s an unfortunate reality – during periods of financial difficulty, you might run into an overdraft issue with your account. While it’s important to never rely on the overdraft options your credit union provides, it’s good to know exactly what those options are and how they can help bring your account out of the negative. Here are the overdraft options Community First offers:
- Overdraft Protection – With this option, in the event of an overdraft, your credit union will transfer funds from another connected deposit account for a small fee.
- Overdraft Line of Credit – Some accounts come with an overdraft line of credit, which allows you to write a check to cover the overdraft up to the amount of the available line of credit.
- Overdraft Privilege – Should you overdraft your account and all other available options have been exhausted, your credit union might cover the overdrafts. It is up to the credit union’s discretion to cover these costs, and stipulations do apply.
Take Advantage of Loan Rates
Credit unions often have lower rates than other lenders and their loans tend to come with added benefits, such as flexible options for those with bad credit. If you are struggling through a tough financial period, not only are you more likely to qualify for a loan through a credit union, but your rate will likely be lower, too.
Learn more about Community First’s loan options. If you’re interested in opening a credit card, check out our credit card selection tool.
Use Free Checking
A free checking account is one in which there is no minimum fee required to keep the account open and no monthly service fee. Credit unions offer greater access to free checking accounts, with a variety of different options, even for those with less than great credit. In fact, a 2018 survey by Bankrate indicated that out of the nation’s top 50 credit unions, 82% offer free checking accounts to their members.
During a financially stressful period, it might be difficult to maintain a required balance in your account and being hit by a service fee can knock your balance down even further and possibly send you into an overdraft situation with more fees. It can be a vicious cycle, but it’s not one you have to worry about when you bank at a credit union.
Start a Conversation With Your Credit Union
As we mentioned at the top of this article, banks are for-profit institutions, and it’s not always clear where their customer service teams' priorities lie. You never have to question this with a credit union because there’s no profit to be made. Owned by their members, you can rest assured that when you’re speaking with a credit union customer service associate, their number one goal is to help you.
A Consumer Report survey found that 93% of credit union members are “highly satisfied” with their financial institution’s customer service as opposed to 69% of account holders at the four major banks. If you’re going through a tough time, you can feel comforted knowing that the conversations you start with your credit union won’t be an additional stressor.
Be Money Smart
Some situations are out of your control, but in many cases, there are preventative measures you can take to make financially difficult times a little easier. One of the best ways to lessen the burden of a tough time is to educate yourself on money management. A great resource is the US Government’s educational site MyMoney.gov.
Community First also has an excellent resource, which not only educates you about smart money management, but gives you the opportunity for a hands-on experience managing the money in your accounts, including building up your Emergency Savings, an important account to have to prepare for unpredictable financially difficult times. Learn more about our moveUP program here.
Don’t Run From Collections
If you find yourself in debt because of a tough time, you might be tempted to ignore collection calls and letters. Some people falsely assume that ignoring collections will make them go away, but the opposite is true – it makes the situation worse by putting you in more debt and making it more difficult to recover your credit score.
The best course of action you can take is to clearly communicate with the collection agencies contacting you. You can often negotiate a payment plan that works with your current situation. Community First also has additional resources to help you, such as our Debt Consolidation loan option.
Contact Community First today if you have any additional questions about how we can help you during a financial hardship.