Credit Unions are another form of financial institution that offers customers a different way of handling their money. Put simply; credit unions look after your money so that you do not have to keep it under your bed! By keeping your money in your credit union, you can not only keep it safe but invest and grow through savings and interest rates.
Credit unions make money in a fairly straightforward way. Basically, credit unions lend patrons money that they need, in order to make a large purchase, or pay something off. After this, the person then pays the credit union back the amount they borrowed, plus interest.
It should be noted that credit unions do not charge a lot of interest. That said because they are a not-for-profit businesses. That means that instead of trying to make tons of money from letting people bank with them, they help out their members by giving them good interest rates on savings and not charging lots of fees.
Believe it or not, credit unions also have bank accounts. The money that you save gets put into a big savings account with everyone else’s savings. Like traditional banks, credit unions do not hold all of the money that is saved with them on their premises. They, credit unions use the money people have saved with them to lend to other people – that is how credit unions can afford to pay you interest on your savings!
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