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5 Drawbacks of Banking With a Credit Union


If you want to break up with your bank, it’s a good idea to pump your breaks before moving over to a credit union. While it’s true that credit unions rival banks by charging fewer fees and accommodating their customers’ needs, they have their flaws too. Before you officially make the switch, it’s a good idea to consider what you could lose by deciding to bank with a credit union.

1. Mobile Banking Might Be Limited or Unavailable

Credit unions are more technologically savvy than they used to be. Today, many of them allow their clients to bank online and a lot of them have banking apps as well. That’s not the case everywhere, however.

When you have an account with a big bank, you’re guaranteed to have the option of banking on the go. With a credit union, you might have to do some extensive research to compare accounts and find out what services they offer. Credit unions only serve certain groups of people and if the ones you can join don’t have mobile banking or their apps aren’t up to par, that could potentially be a major disadvantage.

2. Fees Might Not Be as Low as You Think

5 Drawbacks of Banking With a Credit Union

It’d be wrong to assume that all credit unions have low-fee checking and saving accounts. There’s proof that credit unions have raised their overdraft fees, in some cases more than banks have.

To stay on the safe side, it’s best to inquire about fee schedules and policies before settling on a credit union. You don’t want to be surprised with a penalty or a charge that you didn’t see coming.

3. Credit Card Rewards Might Be Limited

For some credit card holders, it’s all about the perks. Having the opportunity to earn cash back, miles or points can help consumers save big and achieve goals – like travelling to multiple countries – that would take longer to accomplish without their card rewards.

Much like traditional banks, credit union credit cards offer rewards. But they’re usually not as helpful for customers. If you’re planning to use your rewards to score major discounts on hotel rooms or plane tickets, you might be better off sticking with a credit card from a bank.

4. ATMs and Branches Might Not Be Convenient

5 Drawbacks of Banking With a Credit Union

Convenience can be a big problem for some credit union customers. If you’re looking at one of the larger credit unions, there’s a good chance that it’s part of the CO-OP network that allows thousands of different credit unions to share ATMs and even physical branches and kiosks. Still, these aren’t always easy to find and you’ll have to plan ahead if you’re going to need access to your credit union while you’re visiting an unfamiliar location.

If you’re considering a credit union that’s on the smaller side, it might have a limited number of locations in your community. Finding time to visit the branch can be difficult, especially since some credit unions don’t have the most flexible hours.

5. There Might Be Fewer Services 

Credit unions don’t work with the same budgets as big banks. As a result, they might not have as many products for businesses and consumers. A credit union may have an account with few fees, but if you want to take your saving up a notch, you likely won’t be able to rely on a credit union savings vehicle to offer you the best rates of return.

The Bottom Line

Credit unions tout that they have many advantages over brick-and-mortar banks. While this is usually true, it’s important for anyone who wants to make a credit union their primary bank to think about the consequences of trading in their regular bank accounts.

Photo credit: ©, ©, © Katalin Kondoros