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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.

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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.

AAI Credit Union Guide 2009 - Credit Unions often offers lower rates and better terms than main street banks. You should look at their services and rates carefully before taking out a major loan.