Credit unions operate almost the same as banks, but they have a few differences in how they conduct business and what they offer. All credit unions are not for profit institutions, so you will get much better services for lower rates. Most banks are for profit, so you can expect higher rates and other issues with regular banks that you will not have with credit unions.
A credit union gives loans, offers ATM and debit cards, issues checks and holds deposits just like a normal bank would. Credit unions are in most cases owned by the members who hold accounts at them. Any profit that is earned by these institutions is then paid as a dividend to credit union members or invested back into the institution.
Since a credit union is not-for-profit, it is not required to pay any federal or state taxes. This means that they will have less overhead costs, and can charge much lower interest rates than a regular bank would. They also charge much less for overdraft fees or other banking fees than a normal bank would.
While most banks charge a fee now just to have a checking account, most credit unions offer totally free checking accounts in most cases. They also have smaller minimum amounts to start up an account as well. Most banks charge at least $100.00 to open an account whereas a credit union will only charge around $50.00.
There is a pre-determined criterion that must be met in order to be a member of a particular credit union. A person will typically have to live in a certain geographical area or belong to a certain company or organization through employment or otherwise in order to join.
Those who belong to the same social groups attend the same school or those who serve in various military branches are also eligible to join. Credit unions were designed and created to be cooperative monetary institutions for all people that share a common bond in some way.
Credit unions usually have a no hassle loan process as well. In most cases, they will even loan money to people with low credit scores providing they have some type of collateral. Credit unions loan money to members that a regular bank would deny. The approval times are usually much quicker than a bank as well.
Credit unions have been known to offer their members discounts on specialty items and added benefits as well. These specialty items could include theme park tickets, tickets to other events or discounts on other items. Credit unions usually have a scholarship program in place as well. In most cases, any member that has an immediate family member entering college can apply for a scholarship to where their student will get money paid towards his or her college education.
Credit Unions are highly popular with the general public, but banking institutions fight adamantly against them. Over 90 million people in the United States belong to a credit union. Across the world approximately 172 million people belong to credit unions. People are all about saving money, and credit unions provide this opportunity.
There are nearly 50,000 credit union associations throughout the world, but growth has in some ways been hindered due to banks fighting against growth by claiming credit unions are unfair competition. While the banks have won small victories against credit unions, the growth seems on track to continue. Most people will join a credit union over banks any day, because they get more services for a whole lot less money. Credit unions are here to stay it appears, whether banks like it or not.