If you haven’t considered joining a credit union in the past, it’s probably time for you to seriously think it over. Citing data from the consulting firm Callahan & Associates, the Credit Union Times reported that the year-over-year growth of credit union loans in the 4th quarter of 2015 reached 10.6 percent. It was the seventh consecutive quarter in which this double-digit growth trend has been observed, and it’s likely to continue well into 2016.
Community-based financial institutions
The growth of the credit union industry is indicative of how it is becoming a popular alternative to traditional financial institutions like well-established banks. Unlike their for-profit counterparts, credit unions are categorized as not-for-profit institutions and differ in that their customers are actually also their owners. These institutions are basically cooperatives where members share a common bond. For instance, it can be established by members of a community, a company, or a civic organization.
Earning exorbitantly is not what credit unions see as their primary purpose. Instead, they generate profits so that they can return these earnings to their members in the form of dividends and affordable financial products and services. Credit union members typically enjoy higher rates of returns on deposit accounts compared to mainstream banks, while interest rates on loans are also typically lower than those levied by banks.
Moreover, don’t make the mistake of thinking that credit unions offer you limited access to services like ATMs. Even though many of them are community-based, most credit unions are actually members of interbank networks like CO-OP Financial Services, which allow members to access their accounts through thousands of ATMs across the country.
How can you join a credit union?
In order to benefit from the more affordable rates and fees being offered by credit unions, however, you must be able to join one first. As mentioned, these institutions are typically formed by people belonging to certain groups or sharing common bond, so not all of them might be an attractive option for prospective members. A good choice might be geographically based credit unions, like those found in your town or city, which would cater to you and other local residents.
It might be challenging to find the ones that offer the most competitive rates since credit unions are not really known for having a penchant for marketing and promotions. You might need to do a bit of research to discover the ones that are best considering. However, if you find the right institution, you are sure to enjoy not just competitive prices for its products and services, but also the approachable and friendly nature that credit unions are known for.
Is your money safe?
Contrary to some people’s belief that credit unions in the United States are unregulated financial institutions, they are actually regulated, chartered, and supervised by the federal government through the National Credit Union Administration (NCUA). This agency also operates and manages the National Credit Union Share Insurance Fund, which insures the deposits of around 101 million account holders. You can think of the NCUAas the credit union industry’s version of the Federal Deposit Insurance Corporation, which insures commercial banks in the country.
If you want to be financially stable for your retirement, you need to use your time and money wisely. Aside from saving regularly and building an investment portfolio, you should also explore options that allow you to use your money more efficiently, especially when making loans. Explore the opportunities afforded by credit unions. They might just be the right financial institution to help you achieve your goals.
About Carson Derrow
