What is a Credit Union?

What is a Credit Union?

A credit union is a financial cooperative that is owned and controlled by its members. Credit unions provide a safe place for people to save money and access low-cost loans. They are not-for-profit organizations, which means they return profits to their members in the form of lower fees and rates. Credit unions exist to serve their members, not to make a profit.

 

Different between Credit Union and Bank

Credit unions are different from banks in several ways. First, credit unions are member-owned and controlled, while banks are shareholder-owned and controlled. This means that credit union decisions are made by the people who use and benefit from the services, not by outside investors. Second, credit unions are not-for-profit organizations, while banks are for-profit businesses. This means that credit unions return profits to their members in the form of lower fees and rates, while banks return profits to their shareholders. Finally, credit unions are required by law to promote the financial well-being of their members, while banks are only required to promote the financial well-being of their shareholders.

Read more: Is a Bank or Credit Union Right for Your Small Business?

 

Types of Credit Unions

There are two main types of credit unions: federal credit unions and state-chartered credit unions. Federal credit unions are regulated by the National Credit Union Administration (NCUA), a federal government agency. State-chartered credit unions are regulated by the state in which they are chartered.

 

How to Join a Credit Union

To join a credit union, you must first be eligible for membership. Most credit unions have eligibility requirements based on factors such as where you live, where you work, or what organizations you belong to. Once you find a credit union that you are eligible to join, you will need to open an account and deposit money into that account. After your account is open, you can take advantage of all the products and services that the credit union offers.

 

Advantages of Credit Unions

There are many advantages to belonging to a credit union. First, credit unions offer their members competitive rates on loans and savings products. Second, credit unions are member-owned and controlled, which means that decisions are made in the best interest of the members, not shareholders. Finally, credit unions are not-for-profit organizations, which means that they return profits to their members in the form of lower fees and rates. You can also use traditional loans like payday, personal or title loans

 

Disadvantages of Credit Unions

There are a few disadvantages to belonging to a credit union. First, credit unions may have strict eligibility requirements that limit who can join. Second, credit unions may not offer all of the products and services that banks do. Finally, credit unions may have shorter hours and fewer locations than banks. Find banks and credit unions near you with Finance Guider tool.

 

Despite these disadvantages, credit unions offer many benefits to their members. If you are looking for a safe place to save money and access low-cost loans, a credit union may be the right choice for you.

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