Why I’m a credit union member.
I have to disclose something before you read any further: I’m a proud, happy credit union member. I haven’t been inside an actual bank in many years and I’m simply amazed that anybody uses a bank these days.
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I truly believe that the reason more people aren’t using credit unions is because they don’t know what they are or what they can offer. I can’t blame anyone though, since I can be this way with certain things in my life. In many situations, I find myself avoiding novel situations myself; unless somebody shows me how something works, I may balk at trying it out. I may be skeptical about checking something out if it happens to be outside of my comfort zone, especially when it comes to the management of my money.
So when it comes to banking, it’s likely the case that most people will have that skepticism as well, and will prefer to stick to traditional banks. For much of my early adult years, I went to the same bank as that of my parents’; I never bothered to look into any other options. But somewhere along the way, I decided to switch to a credit union. And you know what? Now that I’m a member of a credit union, I would never go back to a bank. I now hope to share with you some of my experiences with this particular type of institution. I also hope to be able to justify to you why credit unions are such a great alternative to banks.
Why I’m A Credit Union Member, No Longer A Traditional Bank Customer
To bank with a credit union, you must first have to qualify to be a member. Many credit unions qualify you as a member if you “live, work, or worship” in the town where they are located. Don’t you wish it were that easy to be part of any institution? After becoming a member, you pay a “share” into the credit union, which is simply the money you agree to let them use while you’re a member. At my credit union, it’s $5. No, this isn’t a typo. This amounts to pennies.
So what exactly is a credit union? In the most overly basic sense, a credit union is an institution that is administered by its members for the purpose of pooling together money from these very members. And rather than making a profit, the credit union gives that money back to its members in the form of better interest rates. To put it simply, it’s a non-profit bank: no shareholders, no profit making bank fees. And when was the last time you heard of a credit union in financial trouble?
One important thing to note is that with a credit union, your money isn’t insured by the FDIC. Instead, it is insured by the National Credit Union Association for up to $250,000. That’s the same amount covered by the FDIC. Something else that’s interesting: a study by the NCUA shows that an average of $150 is saved by each household that uses a credit union rather than a bank.
A credit union offers all of the same services that a bank does, so look up your local institution and do some comparison shopping. You’re almost sure to find better rates!
Contributing Writer: Tim Parker from Elementary Finance