Thursday, August 7, 2008

Why I love Credit Unions

Each year many consumers throw away thousands of dollars to their financial institution for services that should be free. As far as banking goes, I belong to a credit union. At first I joined a credit union because my parents were members of a credit union forever. That was before I went to work in the credit union industry nine years ago and realized the dramatic differences between the philosophies of credit unions and banks.

-Banks are for profit
-Fees are generally their largest income generator
-Banks must please their stockholders – by making as much money as possible

Credit Unions:
-Credit Unions are not for profit
-Loan interest (not fees) is generally their largest income generator
-Credit Unions must please their members – they are the owners of the credit union

Credit Unions are not for profit – this is truly a unique feature of credit unions. All income that is generated by the credit union goes back into providing lower rates on loans, higher rates on savings, and improving technology. Credit unions must generate income to stay competitive – they have to be able to provide the convenience services that banks can provide (Online Banking, BillPay, ATM/Debit cards etc.).

Fees – In general, the amount of credit union fees are much less than standard bank fees. The insufficient funds fee at the credit union where I work is $23.00 per item. At one of our local banks, the fee is $35.00 per item up to a certain number of items, then increases up to $39.00 after that number of items is reached. Many banks charge a fee to speak to a teller or to make a deposit in the branch while most credit unions do not charge a fee for these types of services.

Credit Unions must please their members – A credit union is a financial cooperative designed to fit the financial needs of a specific group of people. That is why you see Fireman’s credit unions or Postal Employee credit unions, etc. For many credit unions, that group of people is a zip code, a county, or a community. These people have a common interest (the group) and through a credit union they can help each other. Some members have borrowing needs, others have saving needs. Credit unions use the “saver’s” money to loan to the “borrowers” pay a dividend to the “savers” and earn income from the “borrowers” which in turn is used to improve the credit union. This is such an amazing philosophy.

How can you find a credit union to join? Check with your employer, friends, family members, and the internet to see what options are available. In the Boise Area, I recommend Idahy Federal Credit Union . I have worked for Idahy for the past 9 years, they truly put members' needs first! When you find a credit union in your area, compare rates, fees, and products with your bank. You will be pleasantly surprised with how much green you can save and how easy it can be to make the switch!

As you can see, I am very passionate about credit unions. They truly are the best option for everyone. Look for many future posts about ways to maximize your credit union membership and save some green in the process!

No comments:

Blog Widget by LinkWithin