The 411 On Credit Unions
With so many different options when it comes to banking, you may be wondering where the best place is to put your paycheck. Not all banks are created equal and each has different types of services to offer you.
One option you have as a consumer is to use a credit union. If you qualify for a credit union’s field of membership, they may be worth checking out before you decide where to do your banking.
What Is a Credit Union?
A credit union is a nonprofit, member-owned bank that takes its profits and gives them back to members. They make this possible by lowering membership fees and interest rates on loans while increasing savings rates. Credit unions can conduct all types of banking business just like a regular bank, including deposits, savings, loans, and other typical financial services.
Members of a credit union come from each specific credit union’s “field of membership.” This means that you qualify to be a member based on your employer, family, geographic location, or a specialty group you may belong to. Once you join, you’re considered a member and your vote can count in making major decisions for the bank. Credit unions have member boards who help decide their policies based on the best interest for all members.
Because they’re nonprofit organizations, credit unions can take their profits and give them back to their members through lower interest rates on many different types of loans. They’re also able to offer a higher rate of return on savings account rates. This allows you to put money back into your own pocket instead of benefitting the executive of a big for-profit bank.
The final difference between credit unions and traditional banks is that a credit union prides itself on being more community friendly. They are actively involved in the community, often in a variety of ways such as scholarships and strong customer service. If you are someone who likes to know who’s handling your money and how it’s being used, a credit union may be the best bet for you!
Top Five Reasons to Use a Credit Union
Customers Come First
When credit unions were formed more than one hundred years ago, they adopted the motto “Not for profit, not for charity, but for service.” This still reigns true in credit unions throughout the county today. Credit unions work hard to serve their community in many ways, including financially. Credit unions always top surveys about the best customer satisfaction nationwide for this reason.
Nonprofit Means More in Your Pocket
With no shareholders to report to, the money that is made in a credit union is passed on to its members. This money comes in the form of low interest rates on personal, auto, education, and home loans. It also means that you’ll see a higher percentage of return in your savings account. All these savings give you more money in your pocket—not someone else’s.
Financial Education Is Important to Them
Credit unions are not in the business of taking your money so they can profit from it. They want to give what they make back to their customers while also supporting them. This support isn’t just through favorable interest rates, but also through teaching its members how to be financially smarter and independent. Many credit unions offer workshops on the best ways to save or how to get rid of debt faster. When you are a smart consumer, you can live your best financial life.
The Lowest Rates in Town
Credit unions pass their profits back to their members through lower interest rates. Because they’re in the business of saving their customers money, they are able to match or even beat the rates that regular banks offer through their earnings. Before taking out any type of loan, it’s always a good idea to check with your credit union to see if they can provide a better rate than what the other institutions may be offering.
They Know and Serve Their Members on a Personal Level
Credit unions are formed around a group of people with common interests. They understand the group they serve on a personal level and are able to tweak their services and events to suit them. For example, credit unions for teachers may offer loan programs for educators in order to help them start or advance their careers. They might also serve their community by offering college scholarships and grants for teachers and students who are innovative in their field.
Giving your money to any financial institution is always a big decision. You’ll work with the bank of your choice for many years to come as you grow and change financially. As you make this decision, consider using a credit union. Even better, see if your employer or an organization you belong to has their own credit union! It’s a great way to connect with the community you’re already involved in.
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