The Benefits of Credit Union Membership?

Answer 1

Credit unions were first formed in the United States in 1934 as an alternative to for-profit banks. As a non-profit business, a credit unions can use more of its accounts receivable to directly serve its customers. The result of this is usually lower interest rates on loans, lower or non-existent account fees and an increased focus on customer service.

How to Qualify for Credit Union Membership

In decades gone by, people could generally only attain credit union membership through their employer or a trade organization that they or their employer belonged to. For example, if you were a teacher in a certain school district, you would be eligible for credit union membership if that school district made it available to you. Today, the only membership requirement is often that you live or work in a certain community. If you are interested in being a credit union member, it would be worthwhile to look up ones in your area and inquire as to their membership qualifications.

Benefits of Credit Unions over Banks

Without executive salaries to pay or expensive overhead to maintain, credit unions are free to provide services to members that are more to their advantage than banks can. You will often find credit unions offering higher interest paid on savings accounts and certificates of deposit, while at the same time charging less interest on home loans, auto loans and credit cards. When credit union members are asked directly why they chose to join a credit union, favorable interest rates is often the top reason given.

When it comes to account maintenance fees, such as imposing a non-sufficient funds fee, they are usually much lower at credit unions than they would be at banks. Also, the average customer can expect to see credit union fees remain fairly stable over time without the introduction of a lot of new fees used to penalize or promote certain financial behavior.

Credit unions are community based, so the emphasis on customer service is usually higher than a bank which may be part of a very large national organization. There tends to be a small town feel with credit unions that many people come to appreciate. Finally, with so many people being eligible for credit union membership these days, it has had the effect of forcing banks to offer more competitive products and services.