Introduction to a Credit Union

Have you asked yourself what is a credit union? 

Why should I look into joining one?

I asked myself those questions when I first started working and got paperwork to join a local credit union. 

My thoughts were first I have a bank so why do I need this. 

Well I started reading the material and found some good benefits into opening an account with the credit union.  I just opened a savings account and became a member.

I started with $25 and only put in $5 per year to stay active.  So you don’t need much to get started or put an amount in every month unless they have requirements.

Each credit union has its list of Eligibility requirements. While credit union membership depends on belonging to a particular community, such as a workplace, region or church, most consumers are eligible, though they may not realize it.

Understanding a Credit Union

A credit union is a nonprofit financial institution that’s owned by the people who use its financial products. Credit union members can access the same kinds of products and services as offered by a traditional bank, such as credit cards, checking and savings accounts and loans. Members elect a board of directors to manage the credit union to ensure that their best interests are represented.

History of a Credit Union

Created by the U.S. Congress in 1970, the National Credit Union Administration is an independent federal agency that insures deposits at federally insured credit unions, protects the members who own credit unions, and charters and regulates federal credit unions. 

How Credit Unions Differ from Banks

The main difference between credit unions and banks is that credit unions are nonprofit, member-only financial institutions, whereas banks are for-profit institutions open to anyone. In addition, credit unions were often created to serve specific regions, communities or businesses, so they are known for providing better in-person customer service at their physical branch locations.

Read more at: Credit Union vs. Bank: Which Is Right for You? – Ramsey (ramseysolutions.com)

How to join a credit union

You can become a member of a credit union in many ways. You may qualify if you live in a certain town or work with an eligible employer. Another option may be through affiliation with certain groups, such as labor unions or schools. You may also qualify if one of your family members is already a member of a particular credit union. Credit unions also require membership, which could entail belonging to a specific group, like a college or university, religious group or labor union, or living in a defined geographic location.

Advantages of credit unions

1. Lower Interest Rates and Fees
2. Higher Interest rates on Deposits
3. Member-Owned
4. Local

Cons of Credit Unions:

1. Limited financial product offerings.

2. Fewer physical branches.

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NCUA-Insured

The National Credit Union Administration (NCUA) is an agency of the United States federal government. The federal government created the NCUA to monitor federal credit unions across the country.

There are 5,164 federally insured credit unions with over 120 million members.

To find a credit union in your state and town, you can visit the NCUA’s website, which offers a list of credit unions by address, credit union name or charter number.

The website also has great learning activities for kids and a Financial Literacy resource section. It’s worth checking out!

Summary:

I have been a member of my local credit union for 20 years with the same savings account.  The higher savings rates have kept me here.  I also got a cheaper auto loan through them with my last car purchase.  Always do your research to check out fees, benefits, and other charges.  Credit unions are still a valuable tool to have in your financial tool belt. Having your money spread out in at least two different banking institutions can provide you more flexibility.

I strongly urge you to look into getting an account with a Credit Union!

Check out more about savings accounts in my other post: How to use multiple savings accounts to save more money – The Frugal Father

Your Turn:  Do you like using credit union vs a bank?