When you have money to save, you usually go to a bank to deposit it. Banks offer security for your money, but when they impose fees and similar hassles, it could make you wish you were better off with a different entity.
Thankfully, one such entity exists, called a credit union. You have probably heard of it, but how exactly does a credit union work, and what can you get from it? Here are four basics explained by Mutual Marketplace to get you started.
Like a Bank, But Friendlier
Credit unions work very similar to banks in that they offer savings or checking accounts, handle home, car and personal loans, as well as process mortgages. The difference is that credit unions are smaller than banks, and they are non-profit cooperatives.
This means credit unions are run by local efforts that put customers first and do not have any big business investors.
Committed To Communities
Whereas a bank is normally open to the public, a credit union usually caters to its community first. For example, credit unions could have eligibility requirements stating you should be an employee or a student of a particular university, or a resident of a certain neighborhood.
Unlike banks, which have ATMs everywhere, credit unions only have many branches due to their size. This is why it is ideal that credit unions serve the local community first.
Credit Union Guarantee
You do not have to worry about where your money goes when depositing to a credit union. This is because it has insurance from a larger entity that governs the cooperatives. For instance, the National Credit Union Association supervises and regulates American credit unions.
Members usually enjoy lower fees and better interest rates because credit union officers are more willing to help them instead of having to satisfy investors the way banks have to. For example, credit unions offer “source-to-pay” solutions in which they basically help you acquire goods or services while considering costs.
These four characteristics are reasons a credit union might be better for you.