If you’re not using a credit union for some, most or all of your personal finance needs, you’re probably paying too much and getting too little from your credit cards, checking and savings accounts and loans. Credit unions are nonprofit financial institutions that almost always offer better rates and fees than banks and credit card companies because they don’t need to make a profit.
If you decide to do your banking and borrowing with credit unions, you can save tens or thousands, and often much more than that, during your lifetime. You can open a checking or savings account, get a credit or debit card, take out an auto loan, get a mortgage or secure a variety of small-business loans and credit products.
If you don’t have excellent credit, you can usually get credit products with a lower credit score at a credit union than you could with a commercial lender. Best of all, the rates you get from credit unions are usually better than commercial lenders offer.
Unfortunately, not many millennials or young professional know what a credit union is or its benefits. Read on to change that and see why it should be an option to help with your personal finances.
A credit union often starts out as a membership financial institution where people of a similar background — such as tradespeople in a certain state or members of a military branch — get together and do their banking and borrowing as a group to get better rates.
Credit unions offer most personal finance products people need, but they don’t need to make a profit. The credit union can then offer lower credit card and loan interest rates, offer higher checking account and savings account interest rates or might return excess profits to the members in the form of an annual dividend check.
You don’t need to be a member of the credit union’s original group to join. Most credit unions will accept anyone who wants to join. You might have to pay a nominal fee or make a donation to a charity to join, though.
For example, Lake Michigan Credit Union, one of the top-rated credit unions in the country, asks for a $5 donation to the ALS Foundation if you want to join but don’t live in Michigan.
Credit unions offer most of the financial products consumers want. Here are a few of the most popular.
Credit unions also offer a wide variety of financial products for small businesses, including credit cards, business loans, credit lines, small business credit cards and customer payment transaction processing.
Yes, they’re safe. Credit unions savings and checking accounts are not insured by the U.S. government’s Federal Deposit Insurance Corporation (FDIC) program, but most are insured by a similar National Credit Union Share Insurance Fund (NCUSIF). Both the FDIC and NCUSIF insure accounts up to $250,000.
Credit unions must also operate under the same federal laws and guidelines as commercial banks and lenders.
Some credit unions offer an ATM fee reimbursement program when you use an out-of-network ATM or partner with national ATM companies.
Credit unions usually offer members financial products that cost less to use and offer better returns. They’re easy to join and safe to use.
Many people can often qualify for credit products at a credit union if they have a lower credit score than a commercial lender will accept. Plus, the more years and more financial products members use from a credit union during a lifetime, the more money that’ll be saved and returned.
In most instances, members won’t notice any service differences when using a credit union for a credit card, vehicle loan, mortgage or checking or savings account.
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