There is a simple answer, but it's also a long answer. Ask
10 credit union members and you'll get as many answers. So, let's start with a
few definitions and then provide some comparisons for greater context. Ready?
Credit Union: a nonprofit, member-owned cooperative whose
members share something in common. I
don't know about you, but I'm at once intrigued and confused. I like the part
about nonprofit, but a little put off by the cooperative part. My experience with nonprofit includes charity
walks and clothing drives. My experience with cooperatives is….well, to be
honest, I've only heard about them in hip neighborhoods in Seattle or New York
City. Maybe Vermont.
Let's tackle cooperative first and we do that with a
comparison. A food cooperative is a member-owned grocer's market specializing
in local food and building community.
Apply that concept to a financial institution and we are on our way.
Food co-ops are known for their select, local, sustainably produced food items.
They are also know for their community-centered operation and providing
valuable education to help their members make good food choices for health and
to support the environment where the food is grown.
Credit unions are known for their select, member-focused
financial products and services. They are also known for their commitment to
their local communities, giving back and enriching the lives of members and
their neighbors. The focus, very much like that of the food co-op, is to
provide members not only excellent financial products and services, but the
education and support so that members can make good decisions about their
finances and how to use their money. Credit unions are also notorious for being
very friendly places - like Cheers, where everybody knows your name.
Now, nonprofit. This is the bottom-line, big difference
between credit unions and banks. Banks are for profit, returning earnings to
stockholders. Having an account at a bank does not make you a stock holder. In fact, a bank stockholder does not need to
use that bank at all. But, you and your account are affected by the decisions
of the stockholders and their focus is on turning a profit.
Having an account at a credit union instantly makes you a
member, an owner. Credit union earnings are returned to members, typically in
the form of higher interest rates on savings products and lower interest rates
on loans and credit cards. Credit unions
are run by a board of directors. Those directors are elected by credit union
members. Each member has an equal vote,
no matter how much money they have on deposit nor the number of accounts they
have.
Well, that was quite the long answer, and there's so much
more to say! The best place to go from
here is to encourage you to get more information. Take a good look at your
financial needs and find out what products and services are available to meet
your needs, now and for your future.
Then experience a credit union for yourself and see what being a member
does for you!
^TFCU
