How to maximize banking services
Checking accounts are all pretty much the same. Right? A great many people choose a financial institution based on some pretty simple factors. It is close to home. The parking lot is easier to get into and out of.
Still, most people choose a financial institution on the basis of interest rates and fees. In that case, many people choose a credit union.
WHAT IS A CREDIT UNION?
The credit union idea began as a simple one: People should be able to pool their money and make loans to each other. It’s an idea that evolved from cooperative activities in 19th century Europe. Founded on a philosophy of service, credit unions adhere to the pledge of “People Helping People.”
Credit unions are not-for-profit, and exist to provide fair and equitable services for their members. Credit unions, like other financial institutions, are closely regulated.
The National Credit Union Administration (NCUA), is the federal government’s regulatory agency for credit union, as FDIC is for banks. Credit union deposit accounts are insured by NCUA for up to $100,000 and up to $250,000 for Individual Retirement Accounts (IRAs).
HOW IS A CREDIT UNION DIFFERENT FROM A BANK?
Banks are owned by stockholders whose interests include earning a healthy return on their investments.
Like banks, credit unions accept deposits and make loans — but unlike banks, credit unions are not in business to make a profit. Instead, income is returned to members in the form of competitive or higher savings rates, competitive or lower loan rates, lower or no-fees for services, or, it is invested in new, improved or expanded services.
FIVE WAYS TO FIND A CREDIT UNION
Credit unions are for everyone, but the law places some limits on the people they may serve. A credit union’s charter defines its “field of membership,” which could be an employer, church, school, or community.
Many credit unions have a “community” field of membership, serving a region defined by geography rather than by employment or some other association. Anyone who lives or works in that community is eligible to join a community-chartered credit union.
Ask your family. One in three Americans belong to a credit union. Chances are you have a family member that uses credit union services. Most credit unions allow members’ families to join. Ask your employer if there is a credit union that serves its employees.
Look at the yellow pages. Some credit unions rarely advertise, so you might not know about them unless you look them up. A yellow pages display ad may state a credit union’s field of membership.
Contact the Credit Union National Association. Call (800)358-5710 or visit http://www.cuna.org and check their online database of credit unions.
CREDIT UNIONS VS. BANKS
A credit union is a cooperative, not-for-profit financial institution. It is owned and controlled by its members. Credit union earnings are returned to its members in the form of higher savings rates, lower loan rates, fewer fees, and expanded services. In contrast, a bank is a financial institution that accepts deposits and makes loans to corporations and individuals for a profit, which goes to its stockholders.
Credit unions give members a voice. Members vote for a board of directors from the general membership. Directors serve on a voluntary basis and hire a chief executive officer, who in turn hires staff to manage the credit union.
Credit unions work together in a highly organized cooperative network — the Credit Union System. The network provides many services to which individual credit unions can subscribe in order to offer their members even more services, such as the nationwide 25,000 CO-OP no-surcharge ATM network; the 2,500 CU Service Center Branches; the availability of obtaining credit union vehicle financing directly at many car dealerships; and a wide assortment of mortgage loans.
There are more than 10,000 credit unions throughout the country serving more than 85 million members. Colorado is home to 144 credit unions, which serve more than 1.5 million members.
Credit unions are not-for-profit, and exist first and foremost to serve their members.
Credit union members are the owners. Members elect a volunteer Board of Directors to strategically guide the organization.
According to the Federal Reserve’s “Annual Report to Congress on Retail Fees and Services of Depository Institutions,” families who use a credit union as their primary financial institution for their transaction accounts and loans, save $250 or more a year in banking fees. In addition, for over 30 years, credit unions have consistently scored higher in customer service.