I am a fan of any financial institution that has a mission aside from profit. Credit unions fit the mission-focused criteria.
There are over 100 million credit union members in the United States that belong to the over 5,000 credit unions scattered across the country. Altogether, there are 50,000 credit unions around the globe. It’s an old but consistent movement that celebrates its global existence in October. On the 3rd Thursday in the month of October, credit unions celebrate International Credit Union Day.
Let me clarify a few things:
Credit unions are financial cooperatives.
Financial cooperatives involve mutual assistance in working toward a common goal. A credit union is owned and jointly run by its members in a mutual exchange of providing and using financial services.
Credit unions are not-for-profit.
It doesn’t mean they don’t make a profit. However, the profits made are reinvested back into the membership. By reinvesting the profits, credit unions can grow it’s product and service offerings to meet the needs of its member base.
Credit unions thrive when its members are actively participating in the cooperative.
Members support the cooperative by having a full relationship that includes banking services, loans, and other financial products and services. Income made from these services help the cooperative cover its expenses and remain financially stable and viable.
The more business you have with a credit union the healthier the cooperative becomes.
Should you join a credit union? It’s wise to consider one.
You can find a local credit union with a simple search online. Or you can ask family members, friends, and coworkers.
Interesting Facts to Know About Credit Unions
In 1934, President Roosevelt signed into law the Federal Credit Union Act. This established credit unions as an alternative to banks to promote thrift and prevent usury during the Great Depression. Many credit unions have decades of history with members spanning generations. The first credit union was founded in Manchester, New Hampshire as St. Mary’s Cooperative Credit Association which opened on April 6, 1909.
Credit unions are not-for-profit financial cooperatives
Like other not-for-profit organizations, credit unions enjoy federal tax exemptions allowing them to offer better rates on savings accounts, lower rates on loans and little or no fees. Credit unions enjoy this benefit because they are mutually operated without the purpose of profit. Credit unions do pay other types of taxes such as state, sales, and payroll taxes. They contribute taxes back into the community for which they serve.
Credit unions are democratically governed
This means you get a voice and elections are based on a one-member and one-vote philosophy. In contrast, banks are governed by paid shareholders with voting rights depending on the number of shares owned. Make sure you make your voice heard at your credit union by communicating and attending the annual member events.
Over 5,000 credit unions in the United States
Unfortunately, the numbers of credit unions are decreasing through mergers and on rare occasions, failures. Credit unions are highly regulated financial entities and federally chartered credit unions are supervised by the NCUA. The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. State-chartered credit unions are regulated by the state for which they operate.
Insured by NCUA up to $250,000
The National Credit Union Administration is backed in full faith and credit by the United States Government and administers the NCUA Insurance Fund. Not every credit union is insured or regulated by NCUA. Some state-chartered credit unions have private insurers for deposit protection. When in doubt ask your credit union about deposit insurance.
Anyone can join a credit union
The myth persists that credit union membership is for the privileged few. In fact, the variety and number of credit unions that exist can mean an overlap of membership. Join a credit union through family members, a job, a church, an organization or your place of residence. Find a local credit union that aligns with your financial needs and values.
Credit unions are convenient
The reality is that some credit unions haven’t caught up to the 20th century while we’re living in the 21st. But there are many credit unions that are giving the fintech startups a run for their venture-backed enterprises. Credit unions offer a wide array of convenient services to include access to online and mobile banking, a shared branching network, and thousands of ATMs through the COOP ATM network.
Once a member, always a member
Once you’ve joined a credit union, you’re a member for life. You can keep your credit union even if you moved out of your city, left a job or changed churches. Once you’re a member, you can continue using the benefits. And with convenient services offered, it’s easier to keep the credit union relationship.
Credit unions have member-owners
You’re not a customer or a guest of a credit union. With credit unions, you’re a member-owner and that means having more say in the operation of the cooperative. This is in contrast to big banks that have customers and shareholders (investors that own shares of a bank and don’t necessarily have any banking relationship).
My Smile Thoughts: Should you be a member of a credit union financial cooperative?
I’m a believer that everyone should be a member of a credit union. In fact, even if you have one of the online or mobile-only banks I’ve written about, you’ll still need a local bank or credit union. I’ve found this to be an important factor in successfully managing finances.
As a user and tester of trendy banking apps, I’ve learned they still rely on “traditional” financial institutions. A credit union is rooted in tradition. #justsaying
What are your thoughts? Are you a member of a credit union? Good stories? Bad experiences? Share in the comments.
And if you work for a credit union, send a message, I’d love to feature your story.