Author: Rachelle Montoya, Member Service Manager
You may already know that credit unions offer many of the same financial services as banks, including savings and checking accounts , also called spending accounts, as well as auto and personal loans, mortgages, credit cards and more. So, what makes a credit union different?
The biggest difference is ownership. A credit union is owned by its members, the people who use its services, while banks are generally owned by shareholders. As not-for-profit financial cooperatives, credit unions are designed to return value to their members rather than generate profits for outside shareholders. That can mean competitive rates, lower fees and a more member-focused approach to your finances.
But what does that actually mean for you?
Here are five benefits of joining a credit union.
1. You Become a Member-Owner
When you join a credit union and make a small deposit into a saving account – also known as the “par value” – you’re actually buying a share of the credit union. That means you become a shareholder of the credit union rather than simply a customer. You have a stake in the cooperative and, depending on the credit union’s charter and structure, a voice in how it is governed. Your relationship with the credit union is more than simply having an account – you are literally part-owner of the financial institution.
2. Competitive Rates
One of the biggest reasons people choose credit unions is the potential for competitive rates. Because credit unions are not-for-profit, earnings can be returned to members through competitive savings rates and loan rates, investment in technology, as well as other services to benefit the member-owners.
That can make a difference when you are saving money or borrowing for a car, home or other major expense. When comparing financial institutions, look beyond the monthly payment. Instead, compare the interest rate, fees and total cost of the loan.
3. Lower Fees
Fees can add up over time. Credit unions may offer lower or no fees on certain products and services because of their member-focused structure. (Remember, the goal of a credit union is not to make a profit, but to provide high-value financial services to the member-owners as inexpensively as possible.) Every financial institution is different, so it is still important to compare fees. But choosing an institution with fewer fees can help you keep more of your money.
4. Your Eligible Funds Are Federally Insured
Are credit unions safe? Yes! If you choose a federally insured credit union, eligible accounts have federal share insurance.
Metrum Community Credit Union is federally insured by the National Credit Union Administration (NCUA). The NCUA’s Share Insurance Fund generally protects qualifying member accounts up to $250,000 per member-owner, per insured credit union, for each account ownership category, subject to applicable rules.
That can include eligible savings, checking, spending, money market and share certificate accounts. So, choosing a credit union does not mean giving up important federal protection for your money.
5. Resources to Help You Reach Your Financial Goals
In addition to being focused on people (members) over profits, credit unions are committed to financial education.
At Metrum Community Credit Union, members have access to financial resources and counseling options to help with different stages of their financial journey. Whether you want to learn more about managing your money, create a budget, pay down debt, consolidate debt, refinance a loan or work toward another financial goal, you don’t have to figure it out alone.
The goal is to give you the tools, resources and support you need to make informed decisions about your money.
Credit Union vs. Bank: What’s the Difference?
The biggest difference between a credit union and a bank is who owns the institution and who it is designed to serve.
Credit unions:
- Are member-owned
- Are not-for-profit
- Can return earnings to members
- Focus on serving their members
Banks:
- Are generally owned by shareholders
- Operate as for-profit businesses
- Return profits to shareholders
This does not mean every credit union will have lower fees or better rates than every bank – products, rates and fees vary by institution – but the credit union structure can create meaningful benefits for members.
Are You Eligible to Join a Credit Union?
Each credit union has its own field of membership, which determines who can join. Eligibility may be based on where you live or work, your employer, a family relationship or membership in a qualifying organization.
If you have never looked into a credit union because you assumed you were not eligible, it is worth checking. You may have more options than you think.
A Reason to Learn More About Credit Unions
Every October, credit unions around the world celebrate International Credit Union Day. This day recognizes the history of the credit union movement and its focus on serving members and communities. However, the benefits of credit union membership matter all year long.
The Bottom Line
What is a credit union? It is a financial institution that offers many of the same services as a bank, but with a different ownership structure.
Credit unions are member-owned, not-for-profit cooperatives. That structure can provide benefits such as competitive rates, potentially lower fees and a member-focused approach.
And when you choose a federally insured credit union like Metrum Community Credit Union, eligible funds are protected by NCUA share insurance up to applicable limits. You can also rest assured that you’re banking with a local financial institution that is managed by people who live and work in your community.
Explore Metrum Community Credit Union’s accounts, loans and other financial services to see what membership could mean for you.
Ready to Join?
Think about who you want holding your money. If you’re ready to bank with a financial institution that works for you, we’d love to welcome you as a member. Simply stop in or become a member securely online.