Do you know someone who belongs to a credit union and wonder if you’re missing out on something? You might be; credit unions are worth considering because they come with some benefits that traditional banks don’t offer.
First, let me explain what a credit union is. It’s a not-for-profit cooperative that provides financial services to its members. In fact, the members actually own the credit union. Where traditional bank depositors receive interest on their savings, member owners of credit unions receive dividends on their share deposits.
Membership in a credit union extends to those who share a common bond of occupation, association or community. For example, many companies offer credit unions as a benefit to their employees.
Just like banks, the federal government regulates credit unions. The primary regulator for federal credit unions and insurer of most state-chartered credit unions is the National Credit Union Administration (NCUA, www.MyCreditUnion.gov). And, as with bank accounts, federally insured credit unions offer a safe place for your savings, with deposits insured up to $250,000.
Credit unions generally (but not always) offer lower interest rates on loans and credit cards and higher rates on savings than traditional banks. This is because they are not-for-profit, so they pass savings onto their members. In addition to shares (deposit accounts) and loans, credit unions may offer a range of other services, including electronic banking, ATMs, and free financial education.
Not all credit unions are created equal. On average, they provide more favorable rates than banks, but you need to do your homework. NCUA makes it easy for you to research credit unions and what they have to offer. Check out the Credit Union Locator at www.mycreditunion.gov/pages/mcu-map.aspx. It is also available as a smartphone app in the Google Play and Apple App stores.
When you find a credit union you’re eligible for, the average cost of purchasing a share will run between $5 and $10. If you can’t think of an affiliation that might open the door to a credit union for you, ask your family members, friends and neighbors. You might be surprised at the number of credit union members in your midst!