The Credit Union or credit union offer an alternative to traditional banks and other societies designed for savings and loans. In some cases they may have interest rates higher than those usually achieved. Here’s how to find a credit union, how they keep your money safe, and when you should use them.
- 1 What is a Credit Union or credit union?
- 1.1 1. Community savings and loan provider
- 1.2 2. The Credit Union or credit union are for everyone
- 1.3 3. Credit Unions offer savings and loans. Some offer current accounts and even mortgages
- 1.4 4. You will not always qualify for a Credit Union or credit union
- 1.5 5. It’s easy to find out if you’re eligible to join a Credit Union
- 1.6 6. They are non-profit and your money is safe
- 2 Borrow from a Credit Union
- 3 Save with a Credit Union
- 4 Savings accounts
- 5 fixed savings
- 6 Are my savings safe at a Credit Union or credit union?
- 7 Do credit unions or Credit Union offer other services?
What is a Credit Union or credit union?
1. Community savings and loan provider
Credit unions have traditionally been small non-profit financial organizations established by a group of people with something in common to benefit their community.
That common factor could be living in the same city, working in the same industry (for example, the Police Credit Union), or belonging to a particular union.
Many credit unions are becoming more professional, becoming more modern by adapting to new technologies to attract savers and offer loans. Many now offer products online and most have some type of storefront.
2. The Credit Union or credit union are for everyone
Credit Unions are there to provide a financial community. The idea is that the members benefit from each other since there is no benefit for any third party, such as a shareholder.
They seek to help those who cannot access ordinary banking products. They are an excellent option in disadvantaged communities and for people with serious financial problems. In addition, they can be a viable alternative to Payday Loans or Home Title loans.
3. Credit Unions offer savings and loans. Some offer current accounts and even mortgages
Most of the Credit Union They do not offer interest rates designed for large loans or savings, only very few, so it always pays to be well informed. Keep in mind that by putting money into a Credit Union, you are helping others in the community. since these cooperatives must first receive money to be able to lend it.
If you are looking for institutions that pay more for your savings, first compare what the credit union offers you with the rates of another type of entity.
Currently, the rates are at historical lows, so searching through the different options will surely give you good results.
4. You will not always qualify for a Credit Union or credit union
In general, to be part of a Credit Union, it is necessary that you have some “common bond” with the members of the organization, either because you live in a certain area or because you have the same profession.
Once you’re a member, you can get involved in decision-making by attending general meetings or other member meetings. In some cases, smaller credit unions may be looking for members who are involved in management and decision-making.
You will almost always be able to stay in the cooperative if the original link no longer exists for some reason, such as if you move house or change jobs. Keep in mind that some smaller cooperatives may not be as flexible. It should be noted that credit unions have been accepting both individuals and organizations as members for some time, which broadens the range of members of the cooperative.
5. It’s easy to find out if you’re eligible to join a Credit Union
There are several ways to find a credit union near you and best check what it offers: In some countries There are Associations of Credit Unions and through their websites you can search (by zip code, type of employment or another statement that you consider) the cooperative closest to your home or the one most closely related to your professional activity.
6. They are non-profit and your money is safe
Credit unions aim to help you take control of your money by encouraging you to save as much as you can and to borrow only what you can afford. In essence, are savings and loan cooperatives, where members pool their savings to lend to each other and also collaborate in the direction of the organization.
A Credit Union is a non-profit organization so the cash is only used to finance the services and compensate the members who work there. No amount of money is dedicated to paying outside shareholders as is the case in most ordinary financial institutions.
Borrow from a Credit Union
One of the main attractions of credit unions is that they are very much geared towards small loans, what most regular banks don’t do. TOSome credit unions can even get you cash the same day.
A few years ago, the first credit unions maintained a strict rule that they would only lend to those members who already had savings in the organization, but this is changing; currently some cooperatives authorize loans to members who have recently joined.
Save with a Credit Union
Generally, you can save small or large amounts of money, weekly, monthly or when you have money for it.
Larger credit unions may even have online banking, which means you can pay online. They usually have branches and collection points such as local post offices; although some smaller co-ops will only be open a couple of hours a week and will probably be based in a community center or church hall.
Credit unions often offer a dividend rate instead of an interest rate. This means that it depends on how well the credit union does that year, so you don’t know what you’ll get for your savings until the end of the year.
This performance will also depend on the country in which you are located. For example, in the UK, dividend rates are 1-3%, but even depending on the circumstances it can be 0% or a maximum of 8% of the sum saved.
Dividends are paid before taxes, so it will be up to you to report taxes on any earnings. Above all, Whether or not you have to pay tax on these dividends will depend on the tax legislation where you are..
TOSome credit unions, usually larger ones with thousands of members, have recently offered low-interest accounts. such as bank savings accounts. You can identify these as they will have a rate listed and possibly be identified as “AER” Annual Equivalent Rate.
Most of the returns offered by these credit union accounts are not the best, but there are some rates that may be worth it if you look carefully.
Are my savings safe at a Credit Union or credit union?
Credit unions are small organizations that lack the enormous resources of banks. On the other hand, the regulations imposed by the control agencies are usually focused on the fact that these cooperatives must be quite prudent in managing their funds.
As with any type of savings, the most important thing to consider is “In case the credit union goes bankrupt, is my money protected?” The answer is yes.
In the case of the United Kingdom, the money deposited in the Credit Union is backed by the Financial Services Compensation Scheme up to an amount of 85,000 pounds per person per institution.
For greater peace of mind, we suggest that you inform yourself about the controls and regulations imposed on cooperatives in the country in which you are located.
Do credit unions or Credit Union offer other services?
If your credit union provides a bank account service, it will likely function much like a basic bank account.
Most credit unions will charge you for the account, this is to cover costs, since they are non-profit entities. Normally this charge is usually a very small amount. Billing for the account exempts you from paying fees for paying late or making a mistake. Other than that, credit union bank accounts typically function like any other bank account..
Through some credit union accounts you will be able to receive the payment of your salary, establish direct debits and permanent orders of the accounts, withdraw money in ATMs and even some credit unions will issue debit cards so you can use them in stores.
However, you won’t have the option of overdraft or a checkbook, so if this is what you need, you’re better off looking at traditional banking options.