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Let’s Look At The Differences

One in every three Americans belongs to a credit union. That’s more than 79 million people who belong to one of 10,000 credit unions with more than $480 billion in collective assets. So what do they know that others don’t know?

First credit unions are member-owned. If you have an account, you are a part owner in the enterprise. In credit unions, net income is earned only to the extent necessary to build sufficient capital reserves. Earnings over and above this are returned to the members through loan and savings rates.

Next, credit unions are not-for-profit. This status helps explain why interest rates tend to be better and fees fewer at credit union than at banks. The profits they do make are distributed as dividends to their members.

Due to their not-for-profit, cooperative structures, credit unions are exempted from most state and federal taxes. Banks have spent a lot of money in lobbying fees trying to legislate credit unions out of existence.

When it comes to personal attention, high-quality service and low fees and rates, consumer satisfaction and better security measures, credit unions continue to knock the socks off other providers in the financial services marketplace.

What Is The History And How Did Credit Unions Begin?

The first American credit union was founded in 1909 in Manchester, N.H. Credit unions have prospered since then, but their popularity was limited due to convenience. They couldn’t offer as many branch locations and as many automated teller machines.

President Franklin D. Roosevelt signed the Federal Credit Union Act into law to “promote thrift and thwart usury,” and banks have pretty much been gunning for them every since.

With the dawn of online banking, access to a credit union is now as convenient as the nearest computer. Credit unions have started to solve the lack of ATM problem by joining networks.

While paying a noncredit union service charge at ATMs was a problem in the past for members, they can now use any of the 101,000 Pulse ATMs across the country free of charge.

Now customers say their credit unions are actually more convenient than traditional banks. You get business done a lot quicker and you get better rates, citing a CD purchased at 4 percent by a local member.
So What’s The Catch With Credit Unions?

Ah, yes, there is always a catch! To join a credit union, you must be eligible for membership. Luckily, there are so many credit unions from which to pick, almost anyone is eligible for at least one.

Membership requirements range from military service to place of employment and school attended to current place of residence. If you do not match any of the requirements then check out National Credit Union Administration Web site.

No institution run by humans and their computers could possibly claim to satisfy everyone all of the time. Occasionally I’ll hear of a credit union that has instituted some silly fee, and too many have opted for “bounce protection” instead of real overdraft protection for their accounts.

Yet most people who have abandoned their banks for credit unions are thrilled they made the switch. You might want to give it a try!