Most business people running banks today, both large and small, are like other business people. They are blinded by “maximizing share holder value”
Credit unions most certainly do have shareholders in a generic sense. Each account holder is a shareholder, and can directly vote on the board and has much more influence on the leadership of the CU than they do in a bank.
An account holder at a CU has direct “skin in the game”.
Secondly they pay federal income taxes, which credit unions don’t. And I don’t really see credit unions passing that savings on to their customers, certainly not most of it.
The reason they don’t pay Federal income taxes is that they are non profits. There is nothing to tax. They are required to keep certain surpluses and reserves. The rest they use to making the lives of their members easier.
They DO pass on the savings. My CU always have much better loan rates than any of the banks, including local banks have, and their fees are much less egregious (though they are starting to get more of a “bank” mentality and there are better and worse CU). And many many CU are members of the Co-Op network which allows me to use my ATM card at many if not most CUs nation wide without fees. And many many CUs are members of the “CU Service Center” (CUSC) organization, which basically means I can walk into ANY CU anywhere in the country, where that CU is a CUSC participant, and it acts like a local branch of my own CU. I use this feature several times a week. I have a CU in Massachusetts I have been part of for 29 years, and I can easily do business with that through any of the CUSC members CU in my areas, and seeing as their are a zillion CUs in Utah, that means I often have a choice of 2 or more CU to walk into in any given square mile of suburbia… (And they tend to be open later in the day and to at least have drive through on Saturday, if not walk in on Saturday, which none of the banks I have looked at here in Utah have).
I also have a personal and a business account at a local Utah CU (federally chartered). But the closest real branch for it is in the next city over, about 12 miles away as the car drives. So I rarely drive over there, and instead use one of the CUs who are closer and in the CUSC organization.
One of my CUs charges NO FEES for having a BUSINESS checking account. The other has a small piddly fee that I get hit with every so many months ($5). When I had a business checking account at a locally chartered Utah bank back in the 90s, they charged me $5 a month plus a per check fee (but they gave me credit for a few checks per month out of the $5). Then they wanted to up the monthly fee, give little or no credit towards per check fees, and up the per check fee. I promptly closed the accounts I had there, moved them to the CU I was using for my personal accounts, and did not look back. That CU charged me no monthly fees whatsoever on my business accounts. (Needless to say, they never charged me a monthly fee for any personal accounts).
I just checked out the car loans at Zions Bank. A local Utah bank (one of the larger ones). Their rate is 3.49% at its lowest (3.62% APR) with a host of “restrictions” like auto-pay, Gold checking account, etc. specifically: “*APR based on credit history, length and amount of loan, and auto-pay discount from a Zions Gold Account. Credit approval required. Lowest rate and APR available to the most qualified borrowers with a minimum amount of $20,000. Fees associated with loan origination. Other rates and plans are available. Other restrictions apply; see branch for details.”
Interestingly, I found a list of 30 or so Utah banks. I went to the websites for 6 of them that show branches in my general area (Ogden to Payson) and that were local, not part of a big bank. Besides Zions, none of them showed their current car loan rates on their websites. That is telling, in my book.
I looked at the rate at DFCU, which is the one where we have our accounts (a business and a personal). The lowest rate they show is 2.59% for 48 months. We refinanced our truck with them back in december when they were showing 2.99% for 48 months. We did it for 12 months and got 2.59% [remember they were showing 2.99% at the time as their lowest for 4 year loans], without having to have $20,000 in assets with them or a minimum $20000 loan value [that is unclear to me in the Zions small print], or auto pay enabled, or any origination fee, or anything else listed with them. And we were refinancing it when the original loan was WITH THEM and they happily did it.
I pay a lot fewer fees and get better loan rates at a CU. Have been for almost 30 years. For a while, one of the CUs even PAID ME a yearly dividend… That eventually ended but their rates got even lower after that for a long while.
And community banks are usually better equiped to make commercial loans while most credit unions are not.
Most of the CUs I have been involved with had no problem making business loans to local small businesses. I never tried to get one but never tried with a bank either. But they all offered them.
But these are all generalizations and to truely see the real differences between A and B, one must compare real institutions.
Yes, you would have to compare actual institutions for details. But I have never found a better deal in a bank, large or small, compared to credit union. Lower fees. Usually fewer fees. Lower loan rates. Nationwide “local” branch access through CUSC (through many but not all CUs). Nationwide ATM network through the Co-Op network at many CUs (most I have seen).
Why would I even care about considering a local bank again? Or any bank?
If I was a huge many multi million dollar company I may have to deal with a bank. But as an individual, and as a small businessman, there is no need.
Most banks today are all about THEM, not the customer. Maximizing share holder value, not account holder value. It does not matter if the bank is local or a big national bank. It may be easier to get into the local bank’s executive suite if you have a problem, but I doubt it helps in the cases where you really need it to matter.