Why Are Millennials Using Credit Unions More Than Banks for Loans?

Some Millennials are having debt troubles. Those who go into debt can sometimes work their way out of it. Others find themselves looking for a personal loan after bankruptcy and don't like their options very much.

Many Millennials can avoid actions as dramatic as bankruptcy to get their financial situations under control, though. Some are turning to personal loans through banks or credit unions if they need money to pay off outstanding debts.

This strategy makes sense for individuals who have credit card debts and want to pay less money in interest. Personal loans often come with lower interest rates, which is why this option seems so attractive.

Those who study the financial sector have noticed that Millennials getting personal loans are using credit unions more than banks recently. Let's take a moment to examine this phenomenon.

Some Millennials Have Soured on Banks

Both banks and credit unions can give Millennials personal loans if they're shopping for one. However, some from the Millennial generation are distrustful of banks.

Credit unions enjoy a better reputation with this population segment because they're smaller, local entities. By contrast, banks are seen as large, faceless corporations that don't care as much about the customer.

Whether fair or not, this perception is causing many Millennials to seek out credit unions rather than banks early in 2023 for their personal loans and other financial matters.

Getting Loans There is Easier

Some Millennials are also turning to credit unions before they feel the process of applying for a loan is simpler and not as time-consuming. Some are looking for loans with less-than-great credit scores. Credit unions are the entities more likely to grant them their wish.

Millennials Are More Tech-Savvy

Millennials are a generation that's more technologically savvy than those who came before. That means they know how to shop around online and compare loan interest rates rather than jumping on the first deal that a lending entity offers them.

Some are finding when they look at the interest rates credit unions offer them versus what they're getting from banks that the credit unions have the more favorable terms. These consumers will use their smartphones to check out comparison sites where they can zero in on the personal loan with the lowest interest rate.

If that's a credit union, they can apply on their phones without ever having to go in and speak to someone in person.

Credit Unions Offer the Personal Touch

Some Millennials also feel that since credit unions are typically smaller, they can get the personal touch there that they wouldn't get with banks. If the consumer has a question about their personal loan or some other financial matter, they can pick up a phone and talk to someone at the credit union much faster than they would with banks.

With a bank, they would likely have to navigate an automated phone menu and wait on hold to speak to someone. The smaller credit union seems like the better way to go.

Credit Unions Might Be Your Better Option

If you're a Millennial seeking debt consolidation through a personal loan, or if you need help with some other financial matter, the reasons we've mentioned for using a credit union over a bank might convince you. Credit unions offer the personal touch, with agents more readily available. You can usually talk to someone faster than you could through a national banking chain.

The tech-savvy Millennial can compare shop for loan offers on their mobile device. If the best offer comes from a credit union, you can jump on that.

Many credit unions will offer loans to Millennials with less-than-great credit. You might not get an offer from a bank. Some individuals from this generation generally distrust banks, viewing them as large, faceless corporate entities.

Using a credit union for your personal loan or other financial matters might make the most sense.