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How do credit unions & building societies differ from banks?
Credit unions and building societies differ from banks as they are owned by their members – that is, they’re “mutuals”. They are mostly focused on a particular community, such as a town or suburb, workplace or industry, but are linked together by one of the largest automated teller machine (ATM) networks in Australia. Building societies tend to be situated in rural and regional Australia, while credit unions are spread throughout the country. The first building societies began operation in Australia in the 1850s, with credit unions starting in the 1950s.
With every customer being a member and shareholder (and having an equal vote in how the organisation is run), credit unions and building societies (in theory) offer products and services designed to cater more for their members than the institution’s bottom line. This is usually the case, with credit unions and building societies coming out ahead of banks on many independent banking product ratings and customer satisfaction reviews. According to Eureka Strategic Research, 80% of members rated their credit unions as “excellent” or “very good” in 2005.
Are credit unions and building societies safe and reliable?
Like banks, credit unions are regulated by the Australian Prudential Regulation Authority (APRA), and building societies are subject to the same regulatory standards as banks. Many people believe that credit unions and building societies are more trustworthy than banks, feeling that they have a more considerate nature towards the consumer. This is partially due to credit unions and building societies’ grounding in customer-based shareholding, contrasting with a bank’s central goal of maximised business profits (including a plethora of questionable fees).
The main industry body for credit unions and building societies is Abacus Australian Mutuals, which is a joint venture between the Australian Association of Permanent Building Societies (AAPBS), the National Credit Union Association (NCUA), and the Credit Union Industry Association (CUIA).
Are credit unions & building societies better than banks?
As with choosing any bank account or financial product it pays to look around and find the best product that suits you. Credit unions and building societies won’t be for everyone, but they’re certainly worth checking out, especially given independent ratings and customer satisfaction reviews. You may feel that you are getting a more personalised service at a credit union or building society than you would at one of the large national banks. If this is important to you, it’s reassuring to know that an alternative is available.