In today’s society, finding a financial institution that will both protect and help your money to stretch is crucial. So too is finding an institution that you are both confident in and comfortable working with. One option that is rising in popularity is credit unions. While these can be great choices for some, for others they remain a mystery. Here is a brief look at what a credit union is exactly.
Credit unions are similar to traditional banks in the sense that both institutions offer financial products to customers. Credit union members, like bank customers, have access to checking and savings accounts, CDs, loan products, and credit cards.
One of the key differences between credit unions and traditional banks is that a credit union is a not-for-profit institution. Because of this, credit unions operate as nonprofits; they can offer higher interest rates on savings accounts, credit cards, loans, CD’s and lower interest rates.
Another crucial distinction between the two financial institutions is that credit unions are member-focused institutions. One major difference is that a credit union is a cooperative - this means it is owned and operated by its members. As opposed to being owned by its stockholders like a bank. Your initial membership deposit makes you a part owner of the credit union and gives you say in the decisions of the credit union.
It is because of this ownership structure, that potential members have to meet membership requirements that vary depending on the credit union’s objective. For example, some corporation’s credit union may only accept employees and their immediate family members. A credit union for teachers, on the other hand, may accept any teacher who works for a certain school district or within a specific region. Some credit unions have more relaxed requirements and may simply request that members live in a certain city or area.
As with any decision, related to one’s finances proper research should be done before making any commitment. After all, you work hard for your money, and you want to make sure that it is working just as hard for you.
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