Credit unions are popular, and if you are not a member of one of them, you have probably heard of them or know someone who is a member. While banks have eclipsed their popularity, they have been around for years. As more people are becoming financially literate, there will be a shift from banks to credit unions as people seek to enjoy the benefits of these credit unions.
Here are some things you may not know about consumer-friendly financial institutions.
- They can save you money
Compared to banks and most other financial institutions, credit unions are cheaper. You can save money with credit unions, thanks to their low rates. The unique business structure of credit unions makes it possible for them to save money.
For instance, while banks pay out their profits to shareholders and reinvest their earnings, credit unions reinvest all their income into their consumer programs. Why do they do this? They have to retain their tax-exempt status, and for this to happen, they have to reinvest their income into their programs.
As a result, their members are able to enjoy lower rates. In addition, they are obliged to provide affordable financing to the members. Join the best online credit union and enjoy affordable financial services.
- They are easy to join
Contrary to what most people may assume, joining a credit union is easy, and anyone can join. While this is the case, there are requirements that members must meet to be accepted as a member of a credit union.
These requirements are not there to provide a barrier to entry. They are designed to provide financial safety for the members. Some of the requirements include the member must be part of a group, be it a community or a workgroup. To be a member, you have to share a common bond with members of the union.
This means you have to provide proof of membership to these groups, and of course, personal identification documents like a driver’s license.
- Interest rates on savings are high
Remember that credit unions work for their members and not their investors as banks do. So this means they have an opportunity to offer high-interest rates on savings to their members. They can offer up to 0.5% higher interest compared to banks.
The reason this is possible is that the business structure of credit unions is non-profit. What does this mean? They don’t have most of the expenses that banks do. For instance, they don’t pay dividends or income taxes. Thus, they are able to afford high interest in consumer deposits.
Credit unions are tech-savvy and can even be accessed through ATMs. They also have branches, meaning they are available in different parts of the country. If you are looking for affordable financial services like savings and loans, a credit union would be ideal.
Some of the benefits you will enjoy include lower ATM fees, lower interest on loans and high interest on savings. Joining is also uncomplicated, provided you meet the set requirements.