publication date: Jun 29, 2012
Credit unions are a unique creature (I guess I should say
species) within the financial services firm universe. Credit unions are similar
to banks in the products and services that they offer (although private banks
tend to offer a deeper array). However, unlike banks which are run as private
businesses seeking profits, credit unions operate as non-profit entities and
are technically owned by their members (customers).
The Promise of Credit Unions
The best credit unions offer their customers better terms on
deposits including checking and savings accounts (higher interest rates; lower
fees) and some loans (lower rates and fees). If they are efficiently operated,
they are able to do so because they don't need to make a profit.
Don't assume that a credit union necessarily or always
offers better products and services than traditional banks because they don't.
The profit motive of private businesses isn't an evil - quite to the contrary,
the profit motive spurs businesses to keep getting better and improving on what
they do.
Credit unions have insurance coverage up to $250,000 per
customer through the
National Credit Union Administration similar to the FDIC
protection that banks offer their customers. As when checking out a bank, be
sure that any credit union you may deposit money into has NCUA insurance
coverage.
Finding a Credit Union You Can Join
The trick to getting access to a credit union is that by
law, each individual credit union may only offer their services to a defined
membership. Examples of the types of credit union memberships available
include:
- Alumni
-
College and University
-
Community
-
Employer
-
Place of Worship
There can be some overlap between these groups. In order to
access a credit union, you may be able to use your family ties.
To find credit unions in your local area, visit the
Credit
Union National Association website.