As more banks increase fees and offer less in return, more everyday folks are turning to credit unions and alternatives as they seek more affordable ways to bank and earn interest on savings. A credit union is no bank. Though their brick-and-mortar may look similar, and credit unions offer many of the same accounts as banks, they operate differently.
The purpose of a credit union is to build and serve its members or community as opposed to making a profit on every transaction, as banks are known to do. Here is everything you’ve ever wanted to know about what a credit union is and how it works.
What Is a Credit Union?
A credit union is a not-for-profit financial institution. Credit unions in Ontario may serve their members by providing them with financial services, which may or may not include chequing accounts, savings accounts, credit cards, loans, and more.
Is a Credit Union Independent?
A credit union is independent and locally controlled by its member owners. It is to their community that they are dedicated to and not to any shareholders or corporate management. Banks are large corporate entities, while credit unions are not.
Can I Do All My Transactions At A Credit Union?
Credit unions offer a lot of the same accounts as banks do. Some credit unions have limited services by comparison. However, many offer the same basic services that banks do. Most people can complete all their transactions at a credit union without issue.
Are Credit Unions More Risky Than Banks?
No, credit unions are as safe, risk-free, and legitimate as banks are. They are insured and regulated in the same way as a financial institution. The Canadian Credit Union Association says more than 5.7 million Canadians used a credit union last year.
How Do Accounts Work at a Credit Union?
All deposits are insured at a credit union in much the same way a bank’s deposits are. Accounts function the same way, with withdrawals and deposits, transactions, interest, and fees all included in your agreement.
Who Runs Credit Unions?
Credit unions are member-owned. This means that when you open an account and become a credit union member, you become part-owner of that credit union. Unlike banks, credit unions are controlled by the members who use their services; thereby, you even have a vote in how a credit union will be managed.
What Is The Difference Between a Member and a Customer?
A credit union customer does not exist. They do not have customers. Credit unions pride themselves on offering memberships, and you need to be a member of one to open an account. In addition, credit unions highly value customer service and routinely go the extra mile for their members.
Can Anyone Become a Member?
Every credit union has rules. Some accept anyone or everyone as a member. Then, others require you to be local. There are employer-sponsored credit unions or are sponsored by a combination of churches, schools, labour unions, or homeowners associations.
How Do Credit Unions Make Money?
Credit unions derive money from membership, transaction, and account fees. In this respect, a credit union’s success is based on how well it serves its member base and how it grows. It uses its available resources, such as what it earns in savings accounts, to find other services, such as a member’s loan.
What Are Credit Union Fees Like?
Credit unions offer lower fees than many banks do. After all, they are a not-for-profit. Any profits earned are returned to members, helping institutions cut fees, offer higher savings, and lower personal loan rates.
Can You Earn a Better Interest Rate at a Credit Union?
Nowadays, a cheque or savings account at a bank will not earn you very much interest. A customer can put in thousands and earn mere cents every month. At a credit union, a member can earn more. Interest rates are more fair and favourable to members, by far.
What Resources Do Credit Unions Offer?
Credit unions are primarily focused on serving and helping the community. They do this through various means, including offering financial education resources and outreach within their membership or geographic area.
Can Credit Unions Offer Investing Advice?
The purpose of some credit unions is to delve into the investment space. They may offer financial advisors and debt assistance in addition to giving out loans and even mortgages. If there’s a credit union in mind that you want to join, investigate a bit to see what they might offer if investing is within your immediate financial goals.
Can I Go to a Credit Union for a Business Loan?
Helping the local community prosper is where credit unions thrive. This includes the micro economy of local businesses, small to medium-sized. Ask your local credit union what they may offer regarding business loans and financial assistance. They may or may not be able to offer a loan or account, as some don’t.
