Credit unions have been around since the 1840s when a group of weavers in England banded together to form the Rochdale Society of Equitable Pioneers. Credit unions continue to be pioneers in the financial world, providing a level of service to their members that traditional financial institutions cannot match. But why should you join a credit union? Hereās whatās in it for you.
Money, money, money
Credit unions typically offer higher rates of interest on savings accounts and lower rates for loans. This can put more money in your pocket every year, and save thousands over the life of the loan. Some federally charted credit unions are legally enjoined from charging interest rates over 18 percent on their loans; this can make a significant difference for consumers with troubled credit histories. Additionally, credit unions are not-for-profit organizations.
What does this mean for you?
For one, it means the credit union doesnāt have a vested interest in charging you outrageous fees for every transaction. Because all profits are redistributed among members (yes, this means you as well), credit unions are less focused on wringing every last cent out of their members and more interested in providing services for them. Most credit union credit cards donāt require an annual fee; free checking accounts and lower penalties for overdrafts are typical features of most credit unions.
Security
The National Credit Union Administration insures credit union deposits up to $250,000; this is similar to the protection the FDIC affords to depositors in traditional banking institutions. Credit unions have weathered recent financial difficulties remarkably well, due in part to the sense of community they foster among their members. When credit unions do fold, they are typically assimilated into another credit union, allowing consumers to continue banking as usual through the new organization.
Statistically, credit unions have outperformed traditional banks; this is especially true in recent years during the housing and financial crisis. In 2008, only 1.37% of all loans held by federally insured credit unions were delinquent. Only 1.19% of home loans were delinquent. These figures represented significant increases, but not the crippling blows that other types of banking institutions experienced over the same period.
Community
Unlike money deposited with large, impersonal banking institutions, the money invested with credit unions stays within the community and is put to work helping individuals and businesses in your own home town. The money you deposit, for instance, may go toward a new building project or a franchise opportunity that will offer services for the entire area. Because credit unions are largely locally-owned and operated, the entire community reaps the benefits of your investment.
The sense of community extends to new members as well. Many credit unions are open to high school or college alumni, members of local churches or religious groups, through work-related affiliations, or residents within a specific geographical area. No matter what your occupation or work status, there is likely a credit union in your area that will welcome you as a member.
Credit unions were established in the United States in 1934 by the Federal Credit Union Act. Franklin D. Roosevelt stated that credit unions were intended to āpromote thrift and thwart usury,ā and they have done just that for over 70 years. With more advantageous rates and better services than traditional banks, credit unions put their emphasis directly on customer service. Credit unions are not-for-profit; this places them squarely in the sights of traditional banks that see them as threats to the all-important bottom line.
If you enjoy paying exorbitant fees for substandard customer service, then credit unions are not for you. But if you are interested in saving money while investing in your local community, credit unions offer great benefits and security for your hard-earned cash.
I heart my credit union. It’s one of the larger ones in my state and has all the features of regular banks. And sometimes, they’re ahead of the times in comparison. If you’re sick of your bank, credit unions are definitely worth the consideration.
Many credit unions now also offer free ATM withdrawals via multiple networks – the most popular being the CO-OP Network. The only major letdown of most credit unions I’ve noticed is the speed/availability of customer service and/or the quality of their website interfaces!
I used to belong to a federal credit union which I was able to join through my connection to the Burbank school system. I didn’t think it very different from other banks at the time. Now as I look back, I might have missed something as I am now reading this post on credit unions and their benefits.
I have contemplated joining a credit union for some time – especially one with a nice juicy high yield checking account.
Credit unions offer good value and service. But the real value of credit unions in not so much what they offer but that using them allows you to avoid dealing with unethical banks and finance companies. Unfortunately banks have become focused on tricking customers into paying huge fees instead of provide value to customers and making a fair profit. Thankfully many credit unions believe in providing decent customer service and taking fair compensation for the services they provide. I have used credit unions for years.
Heck yah join a credit Union! I had a guest post on my blog recently about How your bank hates you, and i mentioned he should join a credit union!
http://www.mydebtregret.com/blog/2009/11/your-bank-hates-you-guest-post/
I heart my credit union! I also financed my car through it as well. The only pitfall it that some have very few locations which can be tricky for those that travel around a lot. Otherwise, I’ve always paid less interest, fewer fees, and gotten much more personal service at my credit union than I have ever recieved at a commercial bank.
Have been a member of a credit union forever. I believe they are b etter because they are owned by the members and not some big corporation
Thank you for your information on Credit Unions. For those of us who are sick and tired of being charged for every transaction or change to our account, it is nice to know there is a banking institution out there that does not make this a standard practice. It is also nice to know that Credit Union’s still care about their communities and put money back into them. Thanks again. You have given me something to think about.
I have been with a Credit Union since my junior year in college and will NEVER give business to a bank. My Credit Union has great rates and even better customer service. We’ve had four car loans, two credit cards and two mortgages with them over the years, and we’ve not had a single problem. Not to mention interest bearing checking accounts and free ATM withdrawals. I’m sure that we’ve saved thousands of $$ during that time. Many people qualify for membership at a CU but don’t realize it. My entire extended family are members now because they are eligible as my family members. Great blog.
I am a credit union member, but the checking/savings rates aren’t really any better than the standard bank. The reasons I joined were that members get really good rates on auto loans and deposits go in immediately, regardless of the time of day the item is deposited. None of the rest of our local banks do that. I got burned several times by my previous bank not crediting deposits for two and sometimes three days later.
Hello! I’m new here. Just wanted to say hi
Having a say in what my bank does is incredibly appealing to me. I have only heard great things about a credit union. I think you may have just put the icing on the cake. Time to move away from the big banks!