Imagine being able to give back to the community while handling your finances. Seems like a dream, right? Well, not only is it possible, but it’s also already happening across the country. A lot of people are contributing to the greater good of the community by joining a federal credit union.
What Is a Credit Union?
Much like banks, credit unions are financial institutions that give clients access to savings accounts, loans, and more. However, unlike banks, credit unions are nonprofit organizations in which their members are co-owners. The earnings that credit unions make are used to benefit their members and the community they serve. By becoming a member, you empower credit unions to:
Give Back to the Community
The money you keep at a bank will likely be used to invest outside of your community and increase their revenue. On the other hand, credit unions will reinvest in the communities they serve. By depositing in a credit union, you can be sure that your money will stay in the local community. Your savings can help credit unions offer loans to a family that is just starting out, a student striving to get a degree, or an aspiring entrepreneur.
What Happens to Your Money at a Credit Union
When making a deposit to your savings account, your credit union borrows a portion of it to offer loans to other members. If this is the case, how come your savings or checking balance is not lower than before? This is because credit unions and other depository institutions are required by federal law to maintain a minimum reserve at all times.
In doing so, they can ensure there’s enough cash flow to transact with their members daily. Credit unions can only loan out a small fraction of their reserve, which is enough to help them build profit without emptying their vault or affecting your account.
Work Toward Their Members’ Best Interest
With no investors and a stock price to worry about, credit unions can provide their members with higher dividends on deposits. This means your savings can earn more interest. Credit unions also pass along their earnings to members through lower interest rates on credit cards and loans as well as fewer fees. As such, banking with a credit union will help you keep more of your money and earn more with your savings. You can also rest easy knowing that financial products such as mortgages and personal loans are easily accessible.
Support Local Charities
Although credit unions are not the only financial institutions that support charities, they focus on nonprofit organizations dedicated to helping the local community. By becoming a credit union member, you contribute to the welfare of your co-members, neighbors, and everyone else in your community.
Advocate Financial Literacy
Credit unions aim to support their members’ financial well-being. They understand that not everyone knows the intricacies of managing finances properly. As such, they do their best to educate members on how to handle their finances.
How Credit Unions Educate Consumers
Because credit unions operate locally, they can focus on providing their members with quality services with a personal touch. They often have excellent, hands-on staff committed to helping clients with everything they need. As such, credit unions can answer any questions and guide you toward financial well-being.
Provide Financial Products Across the Country
A lot of people are in need of various financial products such as mortgages. While there are many lenders across the nation, not all of them offer good rates. Making sure that everyone has access to loans and mortgages at low rates is one of the main goals of credit unions. However, they have fewer brick-and-mortar branches than major banking institutions.
To solve this problem, credit unions partner with other financial cooperatives to give you access to the Co-Op Shared Branch Network. This is a national network of service centers that allows members of credit unions with shared branch access to conduct their banking business.
Key Takeaways
Credit unions are dedicated to working in the best interest of their members and the local community they serve. They support local businesses, give back to charities, reinvest in the community, and advocate financial literacy. As such, joining a credit union contributes to your financial well-being and the welfare of your community.
