A Beginner’s Guide to Credit Unions
With each week bringing new headlines about large banks raising fees or engaging in shady investment practices, more and more consumers are switching to credit unions out of protest. While I try to keep this blog free of politics, I am throwing my support behind the movement to transfer money away from for-profit banks and into not-for-profit credit unions. Joining a credit union is a great way to save money, support your community, and avoid exorbitant bank fees.
To show my continued support for credit unions (I’m already a proud member of PSECU), I’ve compiled a quick guide about credit unions and a list of educational links that readers may find useful.
What is a Credit Union?
A credit union is a financial institution that is owned and operated by its members. If you have a bank account at the credit union, then you have an ownership stake in the credit union itself. You even get a chance to appoint people to the Board of Directors by voting in credit union elections.
Credit unions adhere to a business model that can best be described as “not for profit, but for service.” Unlike the large corporate banks, the goal of a credit union is not to maximize profits for shareholders, but to best serve the members of the credit union. Profits earned by the credit union are passed along to its members in the form of competitive interest rates, lower fees, and dividends. Whereas Bank of America has no qualms about instituting $5 debit card fees while reporting billion dollar profits in the same month, your local credit union is working hard to make sure they never have to charge an expensive and unnecessary fee to remain solvent.
How to Find a Credit Union
Many people shy away from the idea of joining a credit union because they don’t know how to find one, or because they mistakenly believe that eligibility is based on employment. This is unfortunate, because there are a plethora of credit unions out there who accept members based on geographic location, family connections, and groups such as schools and churches. You don’t need an employer to join a credit union.
The best way to find a credit union is to use the National Credit Union Administration’s Find a Credit Union tool. Don’t be intimidated by the form; entering only your city and state is enough to return a list of credit unions in your area.
Further Reading about Credit Unions
The National Credit Union Administration is the government organization that oversees and insures America’s credit unions. The NCUA website has several excellent guides and tools for people who want to learn more about credit unions. I’ve listed some of their more useful links below and encourage readers to check them out.
Facts about Credit Unions (.PDF)
Why Should I Join a Credit Union?
What Is a Credit Union?
How Credit Unions Protect your Money