So, what’s the difference and why does it matter to you? A banks primary purpose is to make money for their investors and stock holders. Unless you hold a stock certificate with your bank’s name on it, they are not in business to help you make money. A Credit Union isn’t trying to make you money either, but as a non-profit organization, they aren’t trying to realize profits. Unlike a bank who has customers, if you belong to a credit union, you are viewed as a member who has a say in how the financial institution is run. You even get to vote for the Board of Directors. Since credit unions are not in business to make profits, they don’t typically charge the high fees and finance charges traditional banks often do. They can offer higher interest rates on savings accounts and lower interest rates on loans. You also won’t find them creating new fees and inventing new policies to increase profits or pay exorbitant executive salaries.
Don’t get me wrong, banks aren’t all bad. They can usually offer a wider range of services and if you belong to a national bank such as Wells Fargo, you can use their branches and ATM’s all over the country. However, that’s pretty much where my praise of banks ends.
Personally, like 90 million other members, I’ve belonged to a credit union since before I could walk. My parents opened an account for me and I’ve been a member ever since. I’m fortunate that it is one of the largest in the country, but for the past 8 years I have lived 4 hours from the closest branch. Thanks to the Internet and reciprocal membership with local credit unions this has been a non-issue for us. According to the Credit Union National Association, virtually everyone in the U.S. can belong to a credit union. They also estimate that members save $8 billion a year due to better interest rates and reduced fees. It might be worth your time to see if you can become a member and take a part of that $8 billion in savings for yourself.
(photo by TheOtter)