Financing Your Life A Guide to Controlling Your Finances, Today
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Last week we were pretty focused on National Estate Planning Awareness Week, but there was another financial holiday in the air—International Credit Union Day. We’re going to observe this little-known holiday a week late by talking about some of the many benefits of credit unions.
- Member-owned: Credit unions aren’t owned by shareholders or private investors the way that banks are. Instead, credit unions are owned by members—which means their incentive is to keep their accountholders happy, not some anonymous shareholder who might not even be a customer of the institution.
- Lower fees and interest rates: Because credit unions are member-owned, they feature lower fees. Their goal isn’t to create a profit off of members to enrich shareholders, but to provide an in-depth service for accountholders. Likewise, their credit card and loan interest rates are generally lower.
- In-depth underwriting: Credit unions offer more personalized, in-depth underwriting for loans and mortgages. This means that they aren’t just going to look at your credit score but are going to dig deeper to evaluate your credit-worthiness and the value of your potential asset purchase.
- Higher yields: Just as lower interest rates are important on your credit cards and loans, higher interest payments (or yields) are important to the growth of your savings. Credit unions often have higher yields because, again, they are not concerned with creating profits for shareholders—but passing profits on to accountholders.
- Unsecured loans: Most financial institutions won’t offer small, unsecured personal loans. This often forces people in a temporary bind to seek out title loans and payday advances—which can be very expensive and dangerous. But credit unions, with their more in-depth underwriting, still offer smaller unsecured loans to accountholders.
- Customer-focused systems and tools: Education and responsiveness may not be at the top of a traditional bank’s list of must-haves, but they are top priority for credit unions. Because credit unions need to keep only their member-owners happy, informed and empowered, they focus all their resources on providing tools that do just that.
Many more people are eligible for credit union membership than you might realize. If your work, associations and location don’t allow for it, find out if any of your relatives are members of a credit union. If they are, you might be able to enjoy all the benefits of membership too.
