Credit unions are often mistaken for banks because of the similarities between the two — both are financial institutions that offer a variety of financial products and services, including checking accounts, savings accounts, money market accounts, certificates of deposit, loans and more. However, there are striking differences between the two that can make all the difference in how you manage your finances.
How is a Credit Union Different than a Bank?
Credit unions are not-for-profit, meaning that they are owned by their members and any deposits or investments are kept in their local community. This helps your neighbors and local businesses have access to financial education, lower loan rates and low to no fees. For example, when a member invests a dollar, the dollar is split into multiple avenues that then funds local businesses, partnerships, sponsorships, loans and more. Deposits are also used to help underserved communities through checking and savings accounts, low loan rates, and home-purchase assistance programs.
Deposits are also paid back to credit union members through dividends, which are paid out quarterly to their savings accounts. When you deposit into a savings account, you will accrue interest and the interest will be paid back to you through compound dividends. This means that your savings will grow without you having to work for it.
Credit unions are democratically governed, meaning that every single member — no matter the size of their account — has a say and a vote. They are also governed by a volunteer board of directors who are elected by the members. Members are able to bring up any concerns that they may have to their credit union and can help make a difference.
Credit unions believe in the people helping people philosophy. This movement impacts the way that credit unions run their institutions — driving them to serve their community by providing easy access to products, services and free financial education, including seminars and counseling. Because of this philosophy, credit unions are able to disperse deposits back to their members and ultimately to their communities. All of this is designed to help members reach their goals, no matter how big or small, through the education that they receive from their local credit union.
If you’ve never joined a credit union, maybe it is time to consider becoming a member of a financial institution that believes in elevating communities worldwide. You may find that credit unions will become your favorite way of banking. Look for a credit union near you and find out how easy it is to become a member.
GECU is available to help you save more. Federally insured by NCUA, GECU has the tools and solutions that you need to save. Visit gecu.com today or call 778.9221, toll-free at 1.800.772.4328, to see how GECU can help you save and find out how easy it is to become a member.