Credit Union ... Bank ... What's the Difference?

by Erienne Andvik

More than 89 million Americans love their credit unions, and they are more satisfied with their service than those who are customers of banks. Credit unions have been a consumer favorite for service and customer satisfaction in the independent American Banker/Gallup poll every year since it began in 1983.

How do credit unions garner the top spot every year? Well, they're different from banks. In honor of International Credit Union Day, observed the third Thursday of every October, here are the top 10 reasons why belonging to a credit union rocks.

No. 1: You belong

At a bank, you are a customer. At the credit union, you are a member, and you belong.

Members can be connected through a place of work, worship, residence, or through family. A field of membership determines who can join each credit union. However your credit union is structured, all members have some kind of shared connection with each other just by belonging.

No. 2: The credit union works for you

As a credit union member, you don't just belong, you own part of your credit union. And you don't have to sit in a stuffy board room every day.

Credit unions take an active interest in local affairs.

The credit union employees work for you-to ensure you're satisfied. Their primary goal is to make sure all your needs are met, and they actually enjoy what they do. Employees get more satisfaction out of their work when members are happy with their service.

No. 3: You pay lower interest on loans and earn higher dividends on deposits

Banks consistently are among the most profitable companies in the world. They are in business to make money for their shareholders. Whereas credit unions are not-for-profit organizations and any profits are returned to you in the form of lower fees, higher dividends, and improved service. Credit unions typically charge fewer and lower fees than other financial institutions, according to the Credit Union National Association's (CUNA) latest fee report. CUNA is the trade association for credit unions nationwide. Overall, credit unions have better loan rates, too.

No. 4: People, not profits, are the No. 1 priority

A bank's top priority is making profits for stockholders. That usually doesn't bode well for your banking experience-or your wallet. Members-not money-are the credit union's most valuable asset. At the credit union, you're much more than just an account number. You are a member-and an owner. Credit union employees know their members and often greet them by name. That's a huge difference from megabanks, where you literally are only one of a million customers. No matter your account balance, you have one vote, which means it's not those who have the most money who are running the show.

No. 5: Your money is protected at the credit union

You've heard of the FDIC, which insures accounts at banks up to $100,000. The National Credit Union Share Insurance Fund (NCUSIF) insures federal and many state credit union accounts up to $100,000. Retirement accounts are backed up to $250,000. If a credit union is not backed by the NCUSIF, it often is insured by a private insurer. Contact someone at your credit union to find out what kind of account insurance it offers.

Credit unions are regulated by the National Credit Union Association (NCUA), an independent agency of the federal government. The NCUA supervises and charters federal credit unions. State-chartered credit unions are regulated by a state regulator.

At the credit union, everyone eligible is welcome.

No. 6: Credit unions can help you make better financial choices

Whether it's buying a car or home, building an emergency fund, or planning retirement, you can turn to the credit union for the facts to make wise choices.

Part of the credit union philosophy is ensuring that members understand financial options. To that end, credit unions offer seminars, newsletters, and print and online financial resources (such as Home & Family Finance Resource Center®, which you're reading now) to help members gain a deeper understanding of financial matters.

Unlike financial predators who try to dupe consumers into thinking there's only one choice, credit unions show members the gamut of choices available for a financial service. The people at your credit union can help members learn the skills to make informed decisions among these options.

No. 7: Credit unions are for everyone, including the Little Guy

Credit unions were founded on the idea of members pooling their money and lending to each other. Credit unions are for all people, especially those who traditionally have been underserved. The Federal Credit Union Act of 1934 states that credit unions were established, "to make [credit] more available to people of small means..." Today, credit unions still follow that idea, serving everyone-from the elderly on small, fixed-incomes to single mothers to well-to-do families. At the credit union, everyone is welcome. Members-not money-are the credit union's most valuable asset.

No. 8: Convenience

Credit unions are located in most communities-including regions that other financial institutions choose not to serve. They offer many or all of the same services banks do, but credit unions focus their attention on individual consumers.

Although your credit union may be only one branch, credit unions have formed alliances to offer you more convenience in a cost-effective way. For example, there are credit union co-op networks of ATMs across the country that charge low or no fees. Each credit union has its own system, so ask the professionals at your credit union where you can use your ATM card for free.

Many credit unions also offer online banking and bill pay, so you can conduct your financial transactions wherever you have access to a computer, at home or halfway around the world. It doesn't get more convenient than that.

As a credit union member, you don't just belong, you


part of the credit union.

No. 9: We listen to you

As democratically controlled institutions, credit unions give you the opportunity to make suggestions and vote for the board of directors and for other policies that can improve your credit union experience. If you want to, you even can run for a position on the board of directors. But you don't have to be a credit union big-wig to be heard. No matter how large (or little) your account balance is, you have one vote, which means it's not those who have the most money who are running the show.

No. 10: Your credit union is a part of your community

Credit unions take an active interest in local affairs. Whether it's sponsoring local community events, working to educate all consumers about better ways to manage money, or offering discounted tickets to local sporting events, credit unions strive to make a positive difference in their communities. Credit unions also work for the sustainable development of communities.

As a credit union member, you could probably add a few more reasons of your own to this list. We'll leave it at 10 and wish you a happy International Credit Union Day using this year's theme: "Together We're Better."

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