|
Credit Unions
Many people do not understand what the difference
is between a credit union and a bank. A bank is a financial
institution that has been chartered by its state of operation, or
the federal government. During its regular business hours, it does
most of the following activities; it receives money and allows
withdrawals of the money in a person�s bank account. It pays
interest, makes loans, issues cashier�s checks, issues drafts and
collects the same. The other is a cooperative, which conducts itself
similarl,y but is owned and operated by those who are members in the
intuition. It is run by and for those members.
Overall, the cooperatives offer the same services as a bank. They
have savings and checking accounts, offer credit cards, and offer
online banking and certificates of deposit. One definite difference
is that they frequently have higher interest rates for their members
than the banks offer. Unlike banks, the size of a credit union can
vary greatly from one to another. It is not uncommon for a
cooperative like this to be run by a handful of volunteers with a
small membership. But it is also not uncommon to find ones that have
tens of thousands of members and assets in the billions.
Due to the fact that these financial institutions are for members
only, there must be some way to determine who is allowed to join.
This is done by what is called a bond of association. A credit union
must confine its member base to some form of common bond. This could
be people who work in the same profession, live in a very specific
area, belong to the same place of worship or even attend the same
school. To keep their members, most of these cooperatives adopt as
part of the rules the philosophy that once a member always a member.
That means that even when a member changes professions or moves out
of the area, they can remain part of the cooperative as long as they
do not close their account. Someone who closes an account and tries
to reopen it later may not have the best of luck when trying to
rejoin.
Credit Union Banks
Chances are that you have heard about a credit
union bank in your area, but you never really understood what the
whole credit union thing was all about. How is a credit union better
than a bank? Why would I want to leave my current financial
institution for a type of service that I’ve never used before?
What, if any, are the pros and cons of using a credit union instead
of my current bank? These are all questions that we likely ask
ourselves when trying to figure out where the best place is to put
our money. Luckily enough, they are very easy to answer.
Before we talk of the pros and cons of a credit union bank in
respect to regular, commercial bank, we have to know what a credit
union actually is. Essentially a credit union is like a bank that is
designed for a group of people who all meet the same criteria. They
could all live in the same area, be alumni from the same college,
and so on and so forth. The important thing is that a credit union
is like a non-profit cooperative for people who all share something
in common.
Because a credit union is driven by its members, it provides a
variety of key benefits over commercial banks. The first, and most
obvious, is that credit unions usually have very low rates on loan
because they are essentially a non-profit organization. This also
translates to higher interest rates for its customers because the
credit union is not trying to make millions for its investors. Also,
the member-centric atmosphere of most of the credit union bank
services have lead countless people to join for the sole reason that
credit unions treat their customers much better than commercial
banks do.
|
