The Benefits of Being a Credit Union Member
Credit Unions are technically open to everyone, but the intended member must be a member of a club or organization that sponsors the credit union. Credit union members are partial owners of these financial institutions and are also voting members regarding the policies of the institution.
Also, The financial products offered by credit unions are often very desirable. Credit unions provide loans to members at interest rates that are lower than those banks and savings and loan corporations. In effect, the credit union members pool their savings to provide loans to themselves when needed at favourable rates of interest. Since the applicant is a member and usually has a deposit with the credit union, it is easier to obtain a loan from a credit union than from a bank. If an applicant is refused a loan from a traditional lender, a credit union can function as a lifeline for needy individuals and families, who may only need to borrow small amounts.
Credit unions traditionally offered greater returns on members' savings products. Most credit unions offer the same products as banks, including traditional savings accounts, checking accounts, money markets and certificates of deposit at varying rates and time periods. However, the interest paid by a credit union on these accounts is generally quite a bit higher than a bank pays.
This is due to two factors. Credit unions are not for profit so all generated incomes is returned to the members. Also the not for profit status affords credit unions substantial tax savings since they are exempt entities, in the United States. These factors contribute to the solvency of most credit unions.
Credit unions offer the opportunity for their members to participate in their own financial futures. Each member has an equal vote, regardless of the size of his or her deposit. Each member votes to determine the direction that the credit union takes. This includes, what investments will be made, what interest rates will be paid on savings products and the amount of interest that will be charged on loans.
Credit unions may make external investments to generate capital for their members. Regulations require these investments to be conservative in nature and usually take the form of government bonds. Investments such as these return a low rate of interest but are traditionally secure. A credit union can also lend funds to other credit unions and the interest charged will be decided upon by the vote of the membership.
by Sally.Anderson 19 years ago