How Many Differences are There Between Credit Unions and Banks?
Posted by, CUD Staff
Credit Unions are financial institutions which do not work for profits as their members control and own shares in the credit union. As a result of an Economic Stabilization act passed in 2008, at least $250,000 of the deposits of a credit union is now insured.
The National Credit Union Administration, which is a federal government agency insured almost eight thousand (8,000) credit unions across the nation. What this means is that in the event that something should go wrong with the credit union, bankruptcy or any other mishaps, then the members are able to get receive up to $250,000 in reimbursed funds.
The main focus of a credit union is to serve its customers as well as to keep the interest rates on investments as high as they can get it, while maintaing a low rate for loans and fees. There is added convenience in using the credit unions’ ATM as the total amount which is free of surcharge is $25,000.
There are currently over ninety million people who are currently credit union members. The critera for joining a credit union can range from your address, where you work, school you attend, other association or where you worship. There are different credit unions for different organizations which encourage savings for the smallest amount you may have available.
Credit unions are known to provide different types of services to meet the needs of working class people. With over 8,200 credit unions countrywide, there is usually a credit union close to you wherever you are. The services offered by these credit unions include savings and checking accounts as well as home and car loans, with better rates than other such institutions.
There are notable differences between banks and credit unions, some of the differences are as follows:
¨ Credit unions are not profit oriented, they don’t operate for a profit, they use the profits earned to offer their members a lower rate for their loans, and an increased rate for their savings and investments as well as lower fees for their products and services.
¨ Bank pays their profits to their directors and stockholders. For every one who make a deposit to a credit union, they get ownership shares in the credit union and become a member, the deposits to the banks gives you no such privilege as far as the banks are concerned, you will always be just a client or customer who make deposits.
¨ Members of the credit union are able to select the members of the board who represents their interest in the credit union. Banks are run by officials paid to perform these duties and stockholders. Credit unions are driven to serve their customers while banks are driven to make a profit.
¨ Credit unions are insured by NCUA (National Credit Union Administration )or by private insurers and is also insured by FDIC (Federal Deposit Insurance Corporation)
¨ They are only able to serve members in their field. Banks are able to provide products and services to anyone.
Credit unions play a huge role in the regulation of the fees charged by banks and financial institutions as without the credit unions, the rates charged would be exhorbitant and the interests ridiculously low, as this is how banks make their profit. Everyone benefits from credit unions in the long run.
