Do you still trust your bank? Are you satisfied with your bank’s service? After the financial crisis that took place last 2008 numerous consumers have lost trust in banks and they chose credit unions as an alternative storage for their hard earned money.
What are Credit Unions and how it differs from banks?
To define, credit unions are not for profit organizations that provide financial service to all their members. Similar to banks, credit unions are offering the same products and bank services such as saving money, pay bills and getting a loan, credit unions are nearly the same.
The Ownership of Credit Union
In the history, the first credit union was established as cooperatives, meaning the people keeping their cash in the union help manage it and they are still operating this way until today. This is the main difference between banks and credit unions. As credit unions treat their customer as members banks are being owned by investors who are not the account-holders or community members.
When you open your account or credit union even with a small amount, you are automatically recognized as a partial owner of the institution and as a member. You’ll have the right to vote when it comes to the credit union leadership or board of members.
Being a nonprofit organization, credit unions have no stockholders who are expecting a quarterly dividend payment as a result. Federally insured credit unions can keep their fees low and place excess earnings in heightening their financial products.
Who’s Running Credit Unions?
If you are a partial owner of credit union like the other members who’ll be in charge? It was stated above that credit unions have their leaders and like any other institution credit unions have a variety of staff which includes a branch tellers, loan officers, administrative and operations and the executives. The Upper management operating credit unions are consisting of the board of directors that makes the financial decision pertaining to strategies, policies and more.
The board is made up of elected volunteers chosen by the members like you. But, unlike on banks, credit union directors are not doing it for pay they just want to be the voice of their union members on how the place is run.
Rates and Fees of Credit Union
Not all, but some credit unions use the same rate and fee schedules similar to huge banks. Although the same rate and fees are not attractive, being an institution run by members, there is less pressure when it comes to maximizing the profits for outside investors.
How to join Credit Unions?
Before, credit unions are only exclusive for those employees who are a member of a certain group. As the year’s pass, the distinction has worn out and the guidelines have changed allowing membership for family, specific occupation and to those who are living in a geographic area.
Most credit unions operating today are expanding their membership to people outside the industry or area, all you need to do is to make a small charitable donation. As a great sample for this, the Pentagon Financial Credit Union is typically open to military employees but anyone can get a membership once they donate $15 to the Voices for America’s Troops.
What are the things you can do at the Credit Union?
In general, credit unions are created to provide financial services to businesses, consumers and to other organizations. When it comes to their offering, you should remember that every credit union is different but here are some of their most common offerings.
• Savings Accounts – this is a safe place where you can keep your cash and earn interest on your hard earned savings. At credit unions, savings accounts are also called as share accounts because like the other members you are a partial owner of the union.
• Checking Accounts – this gives you the opportunity to spend your money without the monthly limit on your payments. You have several options when it comes to accessing your cash: Debit card, Online Bill Payment, Write a Check and Pay Cash
• CDs or Certificate of Deposit – this is like your super power saving account as it pays more than your regular savings, but you have to commit to leaving your money in CD for a required period of time.
• Loans Service – credit unions are using the money deposited by other members to fund loans for borrowers. They are offering home loans, auto loans, personal loans and credit cards.
Is your money in Good Hands with Credit Unions?
Like your bank deposits, your credit union deposits are insured but the organization that protects your money still depends on the type of institution you are using. For federally insured credit unions they are using the National Credit Union Share Insurance Fund or NCUSIF which is a government-backed fund. This means that the quality of insurance offered by federally insured credit unions are same as the FDIC insurance where it is backed by the full faith and credit of the US government.
If you are hesitant with your bank, place your money on a safer storage and be a partial owner of Credit Union.