How Credit Unions Differ from Banks
Credit unions are not-for-profit financial cooperatives but the differences don't stop there.
I am a fan of any financial institution with a mission greater than profit. Credit unions fit the mission-focused criteria.
There are over 130 million credit union members in the United States that belong to nearly 5,000 credit unions scattered across the country. Altogether, there are 50,000 credit unions around the globe. It’s an old but consistent movement celebrating its global existence during International Credit Union Day.
So how is a credit union different from a bank?
To summarize, credit unions are not-for-profit organizations that are created and exist to serve their members. Similar to banks, credit unions offer many of the same banking products and services. They take deposits and provide ways for you to withdraw and use your money. Credit unions also offer loans and credit to meet your financing needs. With credit unions, you’re a member-owner, not a customer. It’s a financial cooperative to save and borrow safely.
Credit unions are financial cooperatives.
Financial cooperatives involve mutual assistance in working toward a common goal. A credit union is owned and jointly run by its members in a mutual exchange of providing and using financial services.
Credit unions are not-for-profit.
It doesn’t mean they don’t make a profit. However, the profits made are reinvested back into the membership. By reinvesting the profits, credit unions can grow their financial offerings to meet the needs of their member base.
Credit unions thrive when members actively participate in the cooperative.
Credit unions are financial cooperatives meaning your participation is vital. As a member, you support the cooperative by using banking services, loans, and other financial products and services. The income from these services helps the cooperative cover its expenses and remain financially stable and viable.
The more business you have with a credit union, the healthier the cooperative becomes.
Most credit unions are supervised by the NCUA
The National Credit Union Administration supervises federal credit unions. The NCUA is a federal agency authorized and backed by the US Government. The agency also administers the NCUSIF that provides deposit insurance to member credit unions.
How to Join a Credit Union
You can join a credit union in several ways and almost everyone is eligible to join. There are four main ways of joining a credit union. You can be eligible based on family, employer, geography, or association.
With thousands of credit unions in the United States, you can find one to join with a simple search online using the NCUA’s website.
Want to learn more about credit unions? Here are ten things you should know about credit unions.
Should you become a member of a financial cooperative?
I’m a credit union advocate and believe everyone should be a member of a credit union. Even if you have one of the online or mobile-only banks I’ve written about, you’ll still need a local bank or credit union. I’ve found this to be an essential factor in successfully managing my finances.
