Can you believe that credit unions have been around for almost 200 years? And yet, as a young adult, I must admit I didn’t even know what a credit union was prior to applying for a teller position at a little credit union in small-town America. Joining a credit union, both as an employee and as a member, turned out to be one of the best decisions I ever made personally and professionally. Yet sadly, there are many, like my younger self, that do not understand how credit unions work, who can join, and what the incredible benefits of membership are.
Credit unions are similar to banks in that they provide all the necessary financial products and services like deposit accounts, auto and home loans, mobile banking, and lines of credit. Credit unions, however, are completely different from banks in that they are not-for-profit. Credit unions do not serve investors— they serve their accountholders, called members. Simply by being a member, a person who opens an account with a credit union is an owner of the credit union. Furthermore, credit unions are not led by a group of paid board members whose interest is to increase profits. Rather, they are led by a volunteer board made up of member-owners of the credit union who represent a wide-array of demographics. This leadership style ensures credit unions focus on reinvesting in their members by keeping fees and cost of borrowing low, while also keeping deposit interest rates high.
So who exactly can join a credit union? The answer to this question is entirely dependent on each credit union’s “field of membership”. In early credit union times, eligibility was typically exclusive to certain groups, like employers, churches, branches of the military, and so on. Nowadays credit union membership (depending on the credit union) is often community-based, meaning anyone who lives, works, worships, or attends school within a certain area is eligible to join. This shift has made credit union membership more accessible. Good news, right?
Credit unions are also focused on ethical outcomes of community financial improvement. As cooperative financial institutions, all credit unions are guided by eight cooperative principles. And as a cooperative, credit unions believe that working together is key to serving the greater good. The eight principles include:
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