Hi There! I go by the nickname Rich Mom on this blog. Because of the financial literacy deficit, my goal is to help as many people, age 30 and under, develop financial literacy. So, thank you for being here. It helps me with my mission. Today’s topic? What is a credit union?
What is a credit union?
A credit union is similar to a bank. They offer many of the same services that banks offer. The services that they usually provide include: savings accounts, checking accounts, personal loans, mortgage loans, and credit cards.
What is the purpose of a credit union?
It may sound like credit unions are very similar to banks. However, these alternatives to banks are not-for-profit organizations that operate with a purpose of offering banking services to their members at competitive rates. This means possibly high interest for deposits and lower rates for loans.
What Are the Advantages of a Credit Union?
Some of the common advantages of credit unions include: higher interest earned, lower fees paid, higher quality customer service, and lower loan rates. Other advantages include the right for members to vote on procedures, and the organizations’ focus on your community. They have good accessibility because of shared branching and ATMs. Also, just like banks, your money is insured in federal credit unions. (Their money is insured by the NCUA, a federal agency.)
What are the disadvantages of a credit union?
The disadvantages of credit unions are as follows:
They usually have fewer branches than most banks.
If your credit union is located near or at your employment, there may not be one near where you live, and vice versa if you are a member of one near where you live.
However, these two problems are eliminated if your organization participates in shared branching, in which you can bank in other credit unions.
What is shared branching?
Shared branching is a network that allows credit union members to bank at others as long as both organizations are part of the network. There are over 3500 member organizations that are part of the shared branching network. Together those credit unions offer over 5600 branches. So, you can bank at credit unions all over the country.
Who uses credit unions?
Credit unions are used by their members. Membership is usually based on being part of a group. That group can be employees in a specific company, branches of the military, a specific house of worship, or even a community where the members live. They are run as cooperatives. A cooperative is a type of business structure in which those who use the business own and operate the business. Because of that, they are tax-exempt.
Are Credit Unions FDIC Insured?
Credit unions are not FDIC insured. Instead, they are insured by the NCUA, the National Credit Union Association. FDIC only insures banks, while the NCUA is only for credit unions. NCUA and the FDIC are both agencies created by the federal government.
What Do I Need To Become a Credit Union Member?
When you go to sign up for membership in a credit union, you could likely need to have any or all of these:
- To be in the field of membership of the given organization
- A government identification with a photo
- A second identification
- A Social Security card
- A bill with your address
- A completed application
- An initial deposit
Contact the credit union in which you have interest to find out exactly what that particular organization requires. It is likely that it will not require all on the above list.
Who Is a Credit Union For?
A credit union exists for the benefit of its members. To do any business with one, you must be a member. So, for instance, if you don’t bank at a specific credit union, you would not be able to take out a mortgage at that specific organization.
Most members of a specific organization have something in common. That thing in common could be employers, houses of worship, military service, for instance. Also, family members can often get memberships, too.
Who Owns a Credit Union?
Credit unions are owned by its members and operate to benefit the members. Profits are returned to their members in the forms of lower rates for loans, higher interest rates on deposits, and fewer fees.
Is It Hard to Join a Credit Union?
It is not hard to join a credit union as long as you are part of the its field of membership. Common fields of membership include:
- Employers
- Houses of worship
- Military communities
- Physical communities based on where you live
What Is the Easiest Credit Union to Join?
There are some credit unions that you can join online while living anywhere in the United States.
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Here are 3 easy to join credit unions:
- Affinity Plus Federal Credit Union: https://www.affinityplus.org
- Latino Community Credit Union: https://latinoccu.org
- Pentagon Federal Credit Union: https://www.penfed.org
Do Credit Unions Have Roth IRAs?
Yes. Credit unions offer Roth IRAs. In fact, money put into their Roth IRAs is considered safe because that money is not subject to market fluctuations such as Roth IRAs invested in the stock market.
Where could I join a credit union?
You can start to look for a credit union to join by checking to see if your employer has one. Some communities have credit unions. Also, some houses of worship have credit unions. There are also some credit unions that allow people to join online, while living in another part of the country. are located. So, in theory, I could have become a member of that organization since I lived in the community..
I hope that this information was useful. Please share a link to somebody who you think would find it helpful.
And don’t forget to subscribe to Rich Mom, Poor Kid to continue to build your financial literacy!
Best,
Rich Mom
Do you want to learn more about this subject? Check out:
What is a Credit Union? I’m Spilling the Tea!
What is a Shared Branch Credit Union?
Who is Rich Mom?
My name is Valerie, aka “Rich Mom.” Rich Mom Answers is a segment of the Rich Mom, Poor Kid blog that gives short answers to my daughter’s personal finance questions. My goal is to teacher, her friends, (and you, if you would like) the vocabulary of financial literacy.
I started sharing these bits of financial information in order to encourage my daughter (aka Poor Kid), because I want to know how to build her own wealth.
The intended audience is people age 30 and under or financial literacy beginners. Subscribe to this blog for weekly inspiration.
Please Note: I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also, remember that past performance is not a guarantee of future performance.
The information shared here is not intended as financial advice, just entertainment and encouragement.
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Credit unions can be such a hassle!
Hi! Thanks for stopping by and reading. Credit unions, just like ice cream, comes in many flavors. I have experience with many credit unions, and have not had any problems with them. Since, I am not sure what you find to be a hassle, I can not give specific suggestions. But, If one specific credit union did not work for you, you could try another. They are not all identical. Credit unions can a great tool in building your personal finances. Wishes you much success! Rich Mom
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