What Can a Credit Union Do For You? Find Out Today!
By Lynda Spence, Family & Consumer Sciences Extension Agent at UF/IFAS Extension-Marion County
Reviewed by Diann Douglas, Family & Consumer Sciences Extension Agent at UF/IFAS Extension-Madison County
This post is honor of International Credit Union Day, celebrated today, October 16th.
Bettina had a birthday, became a teenager, and celebrated Christmas all in the same month. Suffice it to say, December was a profitable month for this middle school student. Her father Raymond did the math, and quickly realized she needed a safe place to store her loot.
Raymond already had a long and successful relationship with his local credit union. As a small business owner, he trusted them and relied on their counsel regularly. His particular credit union was even open all day on Saturday. He felt it was the best place for his daughter to store her growing cache and open her first savings account.
Bettina was excited and felt celebratory to open her own bank account. That Saturday, she would learn why her father had chosen well for her.
The Birth of a Movement
The accounts manager explained to Bettina that in days of old, obtaining a bank loan was only a dream for most common people. Not to be defeated, in the very early 1900s, community leaders decided to create a “union” where neighbors could lend money to each other by pooling their savings. By owning their own financial institution, individuals strengthened their community by creating opportunities for small business start-ups, supporting farmers, assisting people who wanted to buy and build homes, and helping people obtain more education.
Unlike for-profit financial institutions, credit unions do not operate to increase profits for shareholders. Instead, they strive to pass savings on to members in the form of lower fees and interest rates on loans, and to pay higher interest on deposits. Credit unions are non-profit financial cooperatives that serve groups of people with a common bond or linkage. For example, they may be formed around employment, community, or membership in an association or organization.
Democracy In Action
Each account holder has equal ownership, is counted as a member, and has one vote, regardless of how much money they have on deposit. Credit unions are governed by a voluntary board of directors, derived from and elected by the membership.
Much like for-profit banks, credit unions offer:
- Financial education/counseling
- Savings and checking accounts
- Internet banking and bill paying
- Electronic banking
- Overdraft protection
- Home equity loans
- Mortgage loans
- Member business loans
Just as deposits in for-profit banks are protected by the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) Share Insurance Coverage insures credit union accounts up to $250,000. Both the FDIC and the NCUA are fully backed by the United States government. Prudent decisions and practices have rendered credit unions among the most safe and trustworthy financial institutions in the history of our country.
Clearly, Bettina has something to celebrate. Oct. 16, 2014 is International Credit Union (ICU) Day. Its purpose is to shed light on the credit union movement’s history and achievements. This year’s theme is “Local Service. Global Good.” It emphasizes credit unions’ positive impact in their communities and around the world.
UF/IFAS Extension encourages you to check out your local credit union. You will be pleasantly surprised to learn they are not about the almighty dollar–except when it comes to their members, and that could mean you and your family!
(Image courtesy of the World Council of Credit Unions)
World Council of Credit Unions. (2014). International Credit Union Day® – Oct. 16, 2014. Retrieved from http://www.woccu.org/events/icuday
MyCreditUnion.gov. (2014). Historical timeline of credit unions. Retrieved from http://www.mycreditunion.gov/Pages/historical-timeline-of-credit-unions.aspx
MyCreditUnion.gov. (2014). Home page. Retrieved from http://www.mycreditunion.gov/Pages/default.aspx