The Benefits of Credit Unions

What is a Credit Union?

Credit Unions are a nonprofit cooperative financial organization that is formed by an organized group of people with a common bond. Credit Union members pool their assets to provide loans and many other financial services. For the most part, many credit unions exit to help the community, and they strive for quality service over profitability.

Who Owns a Credit Union?

A credit union is an institution owned and controlled by its “members” or customers and operates locally for the main purpose of promoting thrift, providing credit at a reasonable rate along with other financial services. Note that credit unions are nonprofits; however, they are not charities. Credit unions must make sound financial decisions.

In contrast with this concept, banks and other financial institutions are owned by outside stockholders, controlled by paid board members, and where the customers are just customers. Banks answer to profitability – usually shareholders own a bank and expect financial performance from bank management.

What Products do Credit Unions Offer?

In its simplest form, a credit union gets money from its customers and loans that money out to other customers.

For the most part, credit unions typically offer the same products and services as larger banks. However, some credit unions will choose not to offer every product and service out there and the reasoning is that these credit unions do not have the same amount of volume that larger banks generate.

Today’s larger credit unions offer full service business banking which includes high interest business checking accounts, business money markets, and lower interest corporate Visa cards. Commercial mortgages and lines of credit are also offered by Delta Community Credit Union, which is currently the largest credit union in Georgia.

Remember how we talked about the members owning the credit union? Some credit union products have different names than their banking counterparts. Your deposits are called shares because they represent ownership (like shares of stock) in the institution.

How Competitive are Credit Unions?

Small credit unions give the big banks a run for their money. Because credit unions tend to focus on service over profitability, the rates may be better at a credit union. If you are a rate shopper, you may not find the attractive CD sales as often. However, a long-term relationship with a good credit union can be profitable.

Remember that some credit unions do not offer the whole universe of products and services that larger banks will. This may give the banks an advantage if you happen to want those particular services.

Is Your Money Safe at a Credit Union?

Credit union deposits are insured very much like your bank deposits. The organization that insures the two types of institutions is different. However, the quality of insurance is the same- backed by the full faith and credit of the US Government.

Mr. Bruce Maslia of the Delta Community Credit Union is a Trusted Advisor of the BUSINESS HOUSE, inc.^SM