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Money is a personal, sensitive subject. When handling your finances, one of the most important decisions you can make is the financial institution you put your trust in. It’s important to select an institution that will help you reach your financial goals. With several types of financial institutions to choose from, consumers often default to recognizable bank names without considering other options. Despite this familiarity, reassessing your financial plan and exploring the benefits of your local credit union may offer you more personalized services, providing you with the support you need.

What is a Credit Union?

Credit unions are nonprofit financial institutions that are collectively owned by their members. Members appoint a board of directors, ensuring their interests are met and are represented by individuals who are dedicated to their fiscal well-being. Its business model prioritizes members and community, fostering a “neighbors helping neighbors” philosophy. Similar to a traditional banking model, credit unions offer diverse forms of financial products and services such as personal and business accounts, credit and debit cards, high-yield accounts, certificates of deposit, home and auto loans and other accounts and services. Hyper focused on local growth and prosperity, credit unions convert the profits earned from member fees or interest charges into higher savings rates and lower loan rates for members to benefit from. Eligibility requirements for credit unions vary by branch, state or region.

Why Join a Credit Union?

Credit unions are known for their personalized approach to service. By prioritizing members over profits, credit unions emphasize the importance of community development and have unique offerings to serve their members. Credit union offerings usually include the following:

Minimal Fees

One of the most significant benefits of joining a credit union is the potential for lower fees. On average, credit unions offer higher savings rates, lower loan rates and lower fees. Plus, these fees are returned to members through various forms of income, further affirming their investment in the community.

Financial Education and Counseling

Credit unions place a strong emphasis on member education. As neighbors, credit unions tailor their expertise to serve the needs of their members, offering financial education resources to help individuals better manage their finances. These offerings include fiscal workshops, one-on-one counseling, free online tools and financial literacy programs. Whether you’re looking to build your credit, manage debt or save for retirement, credit unions offer resources to prepare you for all of life's milestones.

Member Owned and Not-For-Profit

A key difference between banks and credit unions is their foundation or structure. Credit unions operate as not-for-profit entities with a focus on their members. As a member-owned organization, credit unions are community-driven, meaning their profits are reinvested to benefit account holders by offering competitive rates for savings accounts and loans, minimal-to-no service fees and a wide array of programs and products.

Banks, however, are for-profit organizations focused on building profits for shareholders. They are owned and operated by shareholders and may have higher fees and fluctuating loan and interest rates.

Credit unions help unite communities; from providing affordable financial services to giving back to their neighbors, credit unions can help you make the most of your hard-earned money. Exploring your options at your local credit union will help you determine what is right for you, your budget and your future.

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Rebecca Franco is the Certified Credit Union Financial Counselor (CCUFC) at Family Trust Federal Credit Union.