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Working families must make money management decisions that optimize their available cash and keep their hard-earned money in savings accounts. When ordinary people need home repairs, unforeseen costs, or a little additional money to accomplish something special, a Home Equity Line of Credit (HELOC Loan) might be a great solution.

However, massive bank marketing activities might lead to community members paying exorbitant fees and high interest rates that are unnecessary. Aside from the significant differences in business models, moving your HELOC Loan to a credit union rather than a bank will benefit your savings account greatly.

What is a Home Equity Line of Credit (HELOC), and Why Should You Use it?

A HELOC Loan allows homeowners a low-interest opportunity to leverage a valuable asset they already own — equity. After years of paying down a mortgage, it’s not uncommon for working families to require cash to make home improvements or pay for an important quality of life expense.

Lenders typically allow property owners to use the difference between the remaining balance on their mortgage and the fair market value of their home as collateral. Backed by this security, borrowers find that lenders offer flexible repayment options. The HELOC Loan can function similarly to a credit card in which people withdraw only what they need. Repayment plans can include withdrawal periods of 10 years and repayment over 20 years.

When it comes to choosing where you should apply for your HELOC Loan, here’s seven reasons why your local credit union should top the list.

1. Credit Unions Are Local, Not-For-Profit Institutions

The fact that local credit unions are not-for-profit organizations drives many fundamental differences. Because a credit union does not have shareholders to dole out profits to, that money can be passed along to its members in the form of lower rates and fees as well as higher dividends. When everyday people weigh the benefits of joining a credit union vs a bank, one critical difference involves extra savings.

2. HELOC Loan Rates are Typically Lower at a Credit Union vs Bank

In terms of saving money on loans, the differences can be substantial. Banks generate a great deal of their profits by charging their own customers the highest possible interest rate based on their qualifications. The mindset at a credit union is precisely the opposite. When taking out a HELOC Loan or other product, professionals at credit unions work diligently to ensure you are matched with the best solution for your needs. They also provide the lowest interest rate possible for their members.

3. HELOC Loan Fees are Typically Lower at a Credit Union vs Bank

Working families often join their local credit union because the not-for-profit business model allows management to focus on offering reduced fees to their membership. While banks can charge fees to gain extra income, credit unions are always aiming to charge the lowest possible fee to cover the service, but not to make extra money. Lower fees can be seen throughout most accounts and loans.

Examples of reduced fees can be found when viewing Checking and Share Account fees, ATM fees, Overdraft fees, loan application fees, and closing cost charges. In terms of a credit union vs bank HELOC Loan, property owners are pleased to discover the former often includes only nominal processing fees.

4. HELOC Loan Applications Are Available Online

Credit unions have ensured easy access when it comes to applying for a HELOC by keeping the process easy and convenient with online HELOC applications. Working families often negotiate busy schedules filled with weekly tasks and appointments. The last thing someone wants to do is schedule an after-work meeting or spend Saturday morning waiting in line to find out if you qualify.

Read Also: The Impact of Federal Policies on HELOC Rates

The ability to fill out a HELOC Loan application online and receive a prompt response from a credit union enhances the customer experience. Credit unions themselves on customer service. If you have any questions about the application or approval status, you have a local resource you can contact for direct answers versus an eight hundred number or answering service.

5. Credit Unions Offer Faster HELOC Loan Processing & Local Decision-Making

When community members need resources to pay for home repairs, a memorable family vacation, or unexpected medical expenses, lengthy approval processes prove frustrating. Homeowners typically choose a HELOC Loan because they understand a secure product generally provides lower interest rates and faster access to cash.

When considering the credit union vs bank timeline, the former historically outperform the latter. Their goal is to provide low- or no-cost financial resources efficiently while offering outstanding customer service. They typically have local loan departments that have experts on staff processing the applications and approvals quickly. That’s why credit unions typically process your HELOC Loan much faster.

6. HELOC Loan Questions Are Answered by Experts with Your Best Interest in Mind

The professionals who work at a credit union possess the experience and expertise to help everyday people navigate the HELOC Loan process. They also work closely with applicants to ensure they receive the best loan product to achieve their goals. It’s not unusual for people to meet with a loan professional and discover multiple options. A credit union staff member’s goal is to help everyday people secure the loan product that makes sense for them and their unique financial situation versus hitting a sales goal.

7. Applying for a HELOC Loan at a Credit Union Means You are Supporting Your Local Community

It’s important to understand critical credit union vs bank differences involve more than just lower rates, fees, and approval times. When you join a credit union and take out a HELOC Loan, the money is reinvested in your community. The pool of money a credit union accumulates from residents helps create low-interest opportunities and sometimes no-cost services.

When someone makes the mistake of paying higher rates and fees from a bank, that money is distributed to shareholders. In other words, it’s possible your money is being exported out of your community to wealthy one-percenters. By applying for a HELOC Loan with your local credit union, not only could you be saving money, but you are for sure investing in your community.

Credit Unions vs. Banks

Banks and credit unions have a number of similarities and distinctions to examine. Both provide the same core services, including checking and savings accounts, as well as a variety of lending alternatives. Deposits in credit union and bank accounts are federally insured up to $250,000 per account and account holder.

Fees, interest rates, product selections, convenience, and customer service will all vary, despite the fact that each financial institution is unique. Credit unions typically offer reduced rates and fees, as well as more customized customer care. Banks, on the other hand, may provide a broader range of loans and other financial goods, as well as larger networks, making banking more convenient.


Commercial banks, or retail banks, may be owned by investors or privately owned. Banks operate as for-profit institutions. Anyone can open an account with a bank, whereas credit unions have membership requirements.

There were 4,026 FDIC-insured commercial banks with roughly $22.5 trillion in assets, as of Dec. 31, 2023. Banks can range from one-branch community banks to larger regional and national banks.

Commercial banks typically offer various banking products to consumers and businesses, including checking or savings accounts, personal loans, auto loans, or mortgages. Banks may provide investment and saving vehicles like individual retirement accounts (IRAs), certificates of deposit (CDs), and money market accounts.

Bank deposits are federally insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), so your funds will be safe in the event of a bank failure.

Credit Unions

Credit unions are not-for-profit financial institutions owned by their members. They provide many of the same products and services as banks including checking and savings accounts as well as various loan products and investment accounts like IRAs.

Deposits in credit union accounts, like with banks, are federally insured for up to $250,000, but by the National Credit Union Administration (NCUA) instead of the FDIC.

As of 2024, more than 140 million people belong to a credit union. Credit union members can vote on credit union policies and participate in decisions. According to an NCUA 2022 annual report (latest report), 4,760 federally insured credit unions held assets of around $2 trillion.

Credit unions must limit their customer base to an NCUA-approved “field of membership,” such as a workplace, school, place of worship, or geographic area. National credit unions want to increase membership, so they may offer broader fields of membership, such as accepting members of a specific organization, large company, or broad geographic area.

Credit unions’ profits are returned to members through benefits such as lower fees and better interest rates. According to CUNA estimates, the financial benefits provided to credit union members are equivalent to $156 per member or $328 per member household.

Credit unions were initially developed to provide limited banking services to moderate-income people within a narrow field of membership. As a result, credit unions are exempt from federal income taxes.

Credit Unions vs. Banks
 Credit Unions Banks
Fee CostsLowerHigher
Loan Interest RatesLowerHigher
CDs and Money Market RatesHigherLower
Interest Checking and Savings RatesHigherLower
Customer Service RatingsVariesVaries
Products Offered RatingsFewerMore
Mobile App RatingsSimilarSimilar


Fees can play a significant role in choosing a financial institution. Credit unions tend to charge lower fees than banks.

Average Credit Union vs. Bank Fees
Credit UnionBank 
Average Share Draft Checking NSF Fee $23.86$31.24
Average Credit Card Late Fee$24.56$34.18
Average Mortgage Closing Costs$1,151$1,361

Other 2021 research released by the Consumer Financial Protection Bureau noted that credit unions had lower overdraft and non-sufficient funds (NSF) fees.

However, dozens of fees may be charged by institutions, including monthly account maintenance fees, ATM fees, foreign transaction fees, debit card replacement fees, and other fees. Carefully review any fees important to you. You may be able to find a low-fee or fee-free account at either a bank or a credit union.

Branches and Other Access

While in-person access may not be as important as it once was, many people still desire convenient branch options and ATM access. If you frequently visit a physical branch for consumer or business services, carefully consider a financial institution’s branch network.

Banks get higher customer satisfaction ratings for the number and location of ATMs and branches, compared to credit unions as surveyed by the American Customer Satisfaction Index survey. National banks lead in customer satisfaction with the highest ratings for both ATM and branch numbers and locations.

A credit union tends to have fewer branches on average than banks. For example, the nation’s largest bank—Chase—has more than 4,700 branches.

To offset this disadvantage, credit unions have formed a CO-OP Shared Branch network with more than 30,000 ATMs and 5,000 shared branches nationwide. At shared branches, members can perform many in-person tasks.

Interest Rates

Credit unions typically offer higher interest returns on some products and lower interest rates on lending products.

According to a comparison of 2023 averages, credit unions tend to provide higher returns on certificates of deposit and money market accounts. However, banks offered higher average returns on interest checking and savings accounts that year.

Credit unions offered more competitive interest rates on loans in 2023, charging lower interest rates compared to banks for:

  • Credit cards
  • Fixed-rate mortgages
  • Adjustable-rate mortgages
  • Unsecured fixed-rate loans
  • Home equity loans
  • Used car loans
  • New car loans

In some cases, the rate differences were slight. However, credit unions tended to offer significantly lower rates on average for credit cards and auto loans.

Customer Service

While customer service is often touted as more of a credit union benefit, the American Customer Satisfaction Index’s 2024 survey indicates that banks are slightly stronger in this area overall.

However, the difference is almost negligible, with both Credit unions and banks posting similar scores in different categories across the board, such as in courtesy and helpfulness of tellers or other staff and the speed of in-branch financial transactions. The highest-ranked customer service scores are with regional and community banks.

Product Offerings

ASCI customers scored credit unions slightly lower for various financial services available, including checking, savings, debit/credit cards, and loans. Banks score higher in this regard. For example, many large national banks offer international banking services and products for those who often travel or live abroad. While some credit unions may offer these services and products, it’s uncommon.

When comparing credit cards, national banks dominate our list of best credit cards. Credit union cards tend to focus more on offering lower interest rates versus rewards and perks.

Mobile App

Customers gave banks a slightly higher score for website satisfaction and mobile app quality and reliability in the ACSI survey for 2024; however, again, like most categories, the score differences were negligible.

You can still find excellent digital banking options at many national credit unions. Investigate mobile banking technology and check websites for simplicity and services.

Deposits in both banks and credit union accounts are federally insured for up to $250,000. If you have more than $250,000 to deposit at either a bank or credit union, you consider depositing the remainder with another financial institution.

Credit unions can be ideal for a low-interest loan, lower mortgage closing costs, or reduced fees, but you’ll need to qualify for membership. Larger banks may offer you more choices regarding products, apps, and international or commercial products and services, and anyone can join.

Smaller community and regional banks may give you more customer service for your buck if that’s essential to you. Weigh the pros and cons of each type of financial institution to decide which best serves your needs.

Why Should You Consider Credit Unions for Home Equity Loans?

A credit union offers an alternative to strict bank requirements. The greatest one provides inexpensive loan rates with flexible qualification requirements. It has a strong community presence and is frequently described as a ‘cooperative financial institution’.

It’s no surprise that the number of credit union members in the United States has gradually increased over the last eight years, reaching more than 126 million in 2020. These non-profit organizations are not controlled by shareholders. Members are the proprietors, and they ensure that loans are affordable and in your best interests.

If you want to access the equity in your house, consider obtaining a home equity loan from your credit union. This instrument is versatile and provides a supply of low-interest funding. It allows you to convert your home’s ‘equity’ into cash. The repayment will include both interest and principal. But why is a credit union preferable to a bank when both are similar entities? Take a peek.

No Application Fees

The leading credit union does not charge title, processing, credit report, settlement and underwriting fees. It keeps the loan process from becoming unnecessarily expensive. This helps you meet endless needs with the fund like home renovation or education. Critics argue that application charges are ‘garbage fees’ that increase the closing costs. All you have to pay is the appraisal fees regardless of your membership status.

Credit unions are exempt from corporate income tax on earnings and need to generate only enough for daily fundings. This makes is budget-friendly for people of all income classes.

Easy Support and Service

The home equity loan is a part of the complex world of finance. You might not understand certain terms like Combined Loan-To-Value or Outstanding Rates. But credit unions offer the services of real humans rather than bots. You can ask them live questions. The executives are ready to offer suggestions and recommendations. No wonder the American Customer Service Satisfaction Index for credit unions had once ranged between 81% to 87%. Catering to the members remains one of the guiding principles and core values of these institutions.

Lenient Lending Practices

Several factors like payment history, length of credit history, new credit, credit mix and amounts owed impact your credit report. Studies have found that 90% of top lenders in the US analyze this data before disbursing funds. But a credit union is willing to make an exception in case your credit history is not up to the mark.

Your credit score might never be a part of the lending formula at all. So, you can apply for a low and fixed-rate home equity loan as per your convenience. All of these make it much easier to obtain a loan without worrying about your existing debts and obligations.

The world economy is fast changing. Financial literacy is extremely crucial to manage your money well and avoid drowning in debts. Further, it can also protect you from banks that charge unnecessary fees like overdraft fees without your knowledge. Credit unions help eliminate consumer ignorance and turn the community into a better place. You will have better control over your home equity loan EMIs. Customers are more likely to achieve financial stability and make informed decisions.

In short, a credit union is an ideal choice when it comes to home equity loans. Pick an institution that has a fixed rate option available up to 80% and flexible terms on outstanding rates. These will help you address countless possibilities in the future.

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