Credit unions are finance institutions that essentially do almost all what banks do. Through a credit union you can get access to a savings, a checking or amoney markets account, as well as access to a personal or a car loan, a mortgage or a home equity loan. However, these credit unions are often much smaller institutions designed to serve small communities of people.
The process of choosing a credit union is somewhat similar to that of choosing a bank basically because you are always looking out for the financial institution that will offer you the best service, at the best rate and most importantly ensure your money stays safe.
Here are the pros and cons of a credit union.
#1 They are primarily not for profit institutions
Credit unions are primarily not for profit meaning their loyalty lies with the members who are the primary owners. This means that their services will always be structured for maximum benefit to the members. The disadvantage with this is that since they are not for profit, shareholders are not likely to get much value from their shares in the company in comparison similar shares in other profit making institutions.
#2 They are more flexible
In comparison to other financial institutions such as banks, credit unions are much more flexible in terms of their assessments before granting loans to customers. They are also more human in the way they handle customer bank accounts. This is owing to the fact that customers are actually shareholders. The only challenge with this is that credit unions often expose themselves to risks of default on payment by members because of leniency when doing credit checks.
#3 Branch and ATM locations are limited
Due to their small size, credit unions have a smaller branch and ATM network and this means they are only available in limited locations. This becomes an inconvenience especially if you need to access cash quick. However, some credit unions have solved this by incorporating an online portal that enables its members to carryout banking services from anywhere provided there is internet connectivity.
These may be referred to as cons but in actual sense, they do not affect your bottom line. The financial services you get from credit unions are much more beneficial and friendlier as compared to other financial institutions. What we mean is, these are not really cons in our opinion.
By now you probably know that credit unions are some of the best places to save money as well as get loans. They offer a number of free services such as free checking, and have very competitive rates for their savings accounts as well as loans.
A number of people have passed on the chance to open an account with a credit union because they feel intimidated by the process. Unknown to them is that the process is quite easy.
Here are 3 tips on how to open an account.
First: You have to play the field
Registering for membership to a credit union is often the first step to joining the union. You cannot enjoy its benefits if you are not a member. It is easy though. Generally, members of a credit union usually have something in common. You may be eligible to join the union because your employer has a relationship with it, the credit union belongs to the community you live in or your occupation may automatically entitle you to membership. These are just some of the things that may make you eligible to join the credit union but keep in mind there are many more. In most cases you will have several choices to choose from so be sure to choose a credit union that you feel is offering products and services that suit you and at a rate that best suits you.
Second: Make a modest deposit
Once you have made the decision to join a particular credit union, the account opening process is very straight forward. It’s as simple as walking in and filling out an application. Just like with any other application for a financial account, you have to provide your details such as Tax ID No. or your Social Security No., physical address, a valid identification document and of course the reason you think you are eligible to join. Membership starts the moment you purchase shares in the union which is done by a modest deposit. It mostly ranges between $5 and $10. Be aware that some credit unions may decide to check your credit history before opening your account.
Third: Start using your account
We told you it was easy. You are now a member of the credit union and you now have access to all the services. If you are employed, it is much easier and convenient to have your employer directly deduct your union contributions from your paycheck. This means it goes directly hence lowering your chances of forgetting to make your deposits. You can also opt for electronic payments. Be sure to set up text or email alerts.
It is good to know that there are federally insured credit unions and these are the safest for you since your money is as safe as it would have been in a bank account.
What has been your experience with credit unions? We would love to hear from you.