It’s the little decisions that determine your financial journey. Things like if you have a credit card balance or pay it off in full each month, live below your means by keeping housing costs to a minimum, and even when you choose to work with the bank to determine how. your money works for you. While your grandparents may have kept their money behind the solid walls of their local bank, you have options. Among these options, a credit union is worth exploring. Here are five ways that joining a credit union can benefit you:
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1. Credit unions give you the floor
The old paradigm is this: a bank opens its doors and customers come in, make deposits, take out loans, and make investments. The bank in question sets the rules for everything related to the bank, from the interest rate it charges to whether customers need to make a minimum deposit.
Credit unions have broken this paradigm by making every member a shareholder. In other words, when you join a credit union, you become a part owner, along with everyone else who has joined. As a shareholder, you help decide how the credit union operates, and you can participate in many ways.
You can volunteer, be elected to the board, or become an active voter as new proposals and ideas arise. Credit unions are truly democratic. It is a member, a voice. Even if you have $ 10 in your checking account, your vote counts as much as a shareholder who has hundreds of thousands.
The best part is, you can be as involved as you want. If you don’t have the time to volunteer or sit on the board, you still have a say through your vote. Later, if you find more free time, you can always increase your direct involvement in the business of the credit union.
2. Saves you money
Credit unions are non-profit cooperatives owned and operated by their members. Because you are a member, it is you that the credit union wants to please. Banks, savings, and loans make money primarily from the interest they charge on loans and fees on everything from monthly maintenance to using an off-grid ATM.
All of this is designed to generate a profit for the bank’s shareholders, to provide them with a return on their investment that will make them happy.
When you are a member / shareholder of a credit union, any profit you make is returned to you through low interest rates on loans and higher than average rates on savings and other financial products, like money market accounts (MMA).
Another way credit unions can save you money is by sharing an ATM network with other credit unions across the country. Today there is a network of 30,000 ATMs that you can access for an additional fee just for being a member of a credit union.
3. Protects your deposits
While credit unions seem less secure than traditional banks, nothing could be further from the truth. Most credit union accounts are protected by the National Credit Union Administration (NCUA) up to $ 250,000 per member. The NCUA was established by Congress in 1970 and has done a solid job of protecting members of credit unions. Much like FDIC insurance that covers traditional bank accounts, NCUA insurance is backed by the US government.
Important note: While most credit unions nationwide are covered by the NCUA, a handful are uninsured. And a small percentage of others choose coverage from private insurers. If you’d rather stick with a federally insured credit union, make sure you know what type of insurance a credit union has before you join. Typically the word “federal” will be somewhere in their name, but this is not always the case. Call the credit union to ask what coverage they have or check their website for the NCUA logo.
4. Makes life a little easier
Banking with a credit union is just as easy as banking with a traditional financial institution. It is possible to do everything from opening an account to making deposits from your smartphone, the Internet or one of the 30,000 ATMs at no additional cost across the country. In addition, credit unions have come together to form a cooperative. This means for you, as a member, that you can do your banking at any participating credit union that carries the CO-OP shared branch logo.
5. Offers personalized financial service
Although it may sound silly, you are more than a number when you are a member of a credit union. Because you are a part owner, the credit union wants to make you happy. This can result in something as simple as finding another way to verify your income if you are self-employed and need a loan.
It can also mean offering you a short-term emergency loan or an alternative payday loan (PAL) when you are in financial difficulty. Some credit unions offer free financial counseling and debt management services. Don’t be surprised if a representative from your credit union calls you to discuss ways they can help you improve your financial life.
Credit unions are usually established by people with something in common. It could be a particular type of job, a union affiliation, a shared alma mater, or even the county in which they live. And you can be sure; there is a credit union for everyone. To find a federally insured credit union that meets your needs, NCAU provides this credit union locator.
Choosing the right financial institution may not seem like a big deal in the scheme of things. But a bank where you are treated with respect, have access to the best interest rates, and are free to get involved makes managing your money a little easier.