They don't have consumer outreach
Banks spend a lot of money on slick advertising campaigns in just about every medium. In fact, the financial services industry spends tens of billions of dollars annually, and the numbers just keep rising. As it turns out, that's money well-spent.
"One reason that consumers stay with large banks rather than switching to credit unions is that we tend to fall prey to smooth marketing," says Elle Kaplan, CEO of LexION Capital in New York City. "But if a large bank isn't giving you the best deal, it's worth the effort to move that money to a credit union."
Credit unions do advertise, but according to Nitzsche, their pockets aren't nearly as deep as banks. Primarily, that's because credit unions are member-owned, so instead of spending money on ads, profits are rolled back into the institution to make loans cheaper.
"Local credit unions rely heavily on local community partnerships, referrals and word of mouth. Some consumers may have the perception that more advertising equals better service, which isn't necessarily true," Nitzsche says.
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