You’ve heard of credit unions. You may know someone who belongs to one, or you have one nearby. Maybe you even know that you’re eligible to join one. But what is a credit union, and what is the difference between a bank and a credit union?
Here, we’ll list and explain all the benefits that credit unions offer and why credit union membership might be a good fit for you.
What Is a Credit Union?
Credit unions are member-owned, not-for-profit financial institutions that help their members save, spend, and obtain loans while saving more than they would as customers of big banks.
Credit unions were created in 1934 when Congress passed the Federal Credit Union Act. According to the language of the legislation, credit unions existed “for the purpose of promoting thrift among its members,” helping to establish “a national system of cooperative credit, thereby helping to stabilize the credit structure of the United States.”
So what does all of this mean? Credit unions are here to help people save money and make intelligent financial decisions.
Credit Unions Membership Benefits
Credit unions work in practical terms by distributing their profits among their members in the form of lower interest rates on loans and higher dividends on savings accounts. Because they aren’t beholden to faraway investors the way that commercial banks are, credit unions can afford to invest in their members instead.
Another way credit unions can support their members is through products and services that come with lower fees and sometimes no fees at all. For example, application fees, annual fees, and balance transfer fees often do not exist when you’re a credit union member.
Always Local Service
Credit unions limit their fields of membership by maintaining eligibility requirements. These can be related to where members live, work, worship, go to school, own a business, or volunteer. They can also be related to organizational memberships and employers. Family members of varying degrees are also usually able to join credit unions.
That means that credit union members can count on friendly, local customer service from people who have their best interests in mind.
Supporting Your Community
Credit unions have their roots in improving community during the difficult times of the Great Depression, and they proudly continue that legacy today.
Whether it’s in sponsoring local businesses, providing scholarships to local students, or even giving their employees time off to volunteer in the community, credit unions work to make the places where their members live and work a little better!
Discounts & Financial Literacy
Many times, there are unique benefits that come with credit union membership. Those benefits can include discounts at local businesses, access to affordable insurance coverage, and free financial counseling and literacy services.
They also publish helpful blog articles like the one you’re reading right now!
Shared Branch Privileges
Additionally, credit unions often partner with other credit unions elsewhere so that their members can access their ATMs and bank accounts when they move out of town or are traveling. These shared branch privileges are just one of the benefits that make credit union membership worthwhile.
A Financial Partner That Cares About Your Success
Everybody wants to make the most of their hard-earned money, just like they want to feel like they belong to something and can make a difference. With a credit union, you can do that.
When you trust a credit union to help you grow and save your money, you’re joining with a partner who wants you to have a bright financial future. Because of the way they’re structured, when one credit union member succeeds, every credit union member succeeds.
Could Credit Union Membership Be Right For You?
Chances are, you live, work, go to school, or belong to an organization that entitles you to eligibility with a credit union. If that’s the case, you still might be curious about whether a credit union or a bank is a better fit for you and your financial goals.
If there’s one thing credit unions know, it’s that every person is an individual with a unique set of circumstances. The right financial fit for one person might not be the right one for someone else. To help you learn the differences between a credit union and a bank, click the link below for our comparison article.