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15 Things You Should Know About Credit Unions

With credit unions, you're not just an account number or a customer; you're a member-owner, which gives you more say about the direction of your credit union.

A study of 10,000 millennials showed that banks were the four most hated brands. This is probably why many of us have turned to alternative nonbanks and startups. However, credit unions are the original banking alternative that shares many of your values.

I’m sure you’ve heard about credit unions but still don’t understand what makes them unique. Credit unions are integral to the financial services industry, offering products and services to over 130 million people.

Credit unions can contribute to your financial wellness.

Benefits of Membership

Credit unions are often the only avenue some people have to access banking and credit products.

  • Higher interest rates on deposits
  • Low or no minimum balances for deposit accounts
  • Low or no fees on savings and checking accounts
  • Lower interest rates on loans and credit cards.
  • Profits shared in the form of dividends
  • Multi-generational accounts
  • A focus on financial education

Differences between credit unions and banks

Credit unions and banks are financial institutions that offer banking and loan products. They both accept deposits and use those funds to issue loans. Many of the products and services offered by banks may also be offered by credit unions, making it a bit more difficult to determine the difference. However, credit unions are structured quite differently than banks.

Today, I want to share 14 things you might not know about credit unions.

1. Self-identity

As a customer, you want to be heard. With credit unions, you’re not just an account number or a customer; you’re a member-owner, which gives you more say about the direction of your credit union.

2. Cooperative sharing

You’ve probably ridden on a ridesharing app like Lyft or rented a room on Airbnb. You probably also supported a crowdfunding campaign. This could mean you value cooperative sharing and support. Credit unions are financial cooperatives, which means they are owned and operated by their members.

3. Supporting communities

Credit unions are formed to serve the interests of a common group of people. To join a credit union, you must be eligible for membership by sharing a common bond. For example, credit unions serve the military community, a workplace, a church, or a geographical area. In return for your membership, credit union profits are reinvested back into the membership and the community it serves.

4. Social responsibility

Credit unions were formed to give access to credit and banking services to people not served by traditional banks. They offer many of the same products and services as banks. They often offer better savings, lower loan rates, and little to no fees compared with big banks.

5. Value your time

We all want products that are easy and simple to use. And credit unions are investing in technology to increase convenience and ease of use. Many offer online banking, mobile apps, budgeting tools, and access to thousands of surcharge-free ATMs.

6. A purposeful founding history

In 1934, President Roosevelt signed into law the Federal Credit Union Act. This established credit unions as an alternative to banks to promote thrift and prevent usury during the Great Depression. Many credit unions have decades of history, with members spanning generations. The first credit union was founded in Manchester, New Hampshire, as St. Mary’s Cooperative Credit Association which opened on April 6, 1909.

7. Not-for-profit financial institutions

Like other not-for-profit organizations, some credit unions enjoy federal tax exemptions, which allow them to offer better rates on savings accounts, lower rates on loans, and little or no fees. Credit unions have this benefit because they are mutually operated without the purpose of profit. It’s important to understand that credit unions pay other types of taxes, such as state, sales, and payroll taxes. They contribute taxes back into the community for which they serve.

8. Credit unions are democratically governed

This means you get a voice and elections are based on a one-member and one-vote philosophy. In contrast, banks are governed by paid directors who may or may not be shareholders and owned by investors with voting rights depending on the number of shares owned. As a credit union member, your participation is vital. Make your voice heard at your credit union by communicating and attending the annual member events.

9. Over 4,000 credit unions

There are thousands of credit unions across the United States with different membership eligibility to meet the needs of its communities. You can find a credit union to join that understands where you live, how you work, and what you do in the area. Find a credit union to join.

10. Insured by NCUA up to $250,000

The National Credit Union Administration is backed in full faith and credit by the United States Government and administers the NCUA Insurance Fund. Not every credit union is insured or regulated by NCUA. Some state-chartered credit unions have private insurers for deposit protection. When in doubt, ask your credit union about deposit insurance.

11. Offer conveniences

Many credit unions are giving the fintech startups a run for their venture-backed money. Credit unions offer a wide array of convenient services, including access to online and mobile banking, a shared branching network, and thousands of surcharge-free ATMs.

12. Credit unions offer competitive interest rates

Credit unions are highly competitive regarding savings rates and interest rates on loans and credit cards. This is due to the lower cost of operations and the tax exemptions that allow them to invest profits back into the membership.

13. Anyone can join a credit union

The myth persists that credit union membership is for the privileged few. In fact, the variety and number of existing credit unions can mean an overlap of membership. This is good news: you’re eligible to join many credit unions. You can find a credit union through family members, a job, a church, an organization, or a residence. Find a credit union to join.

14. Once a member, always a member

Once you’ve joined a credit union, you’re a member for life. You can keep your credit union even if you move out of your city, leave a job, or change churches or associations. Once you’re a member, you can continue using the benefits. And with convenient services offered, keeping the credit union relationship is easier. As a member, you can help your immediate family members become members, too.

15. Credit unions have member-owners

You’re not a customer or a guest of a credit union. With credit unions, you’re a member-owner, which means you have more say in the operation of the cooperative. This contrasts big banks with customers and shareholders.

What are your thoughts? Are you a member of a credit union? Do you have good stories or bad experiences? Let us know!

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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