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Credit
unions are unique organizations because they are not-for-profit financial
institutions that exist to provide exemplary service to consumers, which they
call members. At a credit union, members are owners of the organization and have
an equal voice in the credit union’s operations, regardless of the amount they
have on deposit. Credit unions believe that access to high quality, low-cost
financial services is critical to the financial health and stability of ordinary
Minnesotans.
What is a Credit Union?
A
credit union is a member-owned, not-for-profit financial cooperative formed to
provide members products and services that meet their unique needs. Credit union
membership offers numerous benefits including access to savings, financial
education and counseling, home equity loans, IRAs and more.
Credit
unions are democratic organizations owned and controlled by their members. Each
member receives one vote regardless of whether they have $1 or $100,000 on
deposit at the credit union.
Just as
banks have FDIC insurance, money at all Minnesota credit unions is also backed
by the full faith and credit of the U.S. government. The National Credit Union
Share Insurance Fund (NCUSIF) insures a member’s shares on deposit at a credit
union up to $250,000.
The difference between
credit unions and banks
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Credit Unions |
Banks |
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Not-for-profit cooperatives. |
For-profit organizations. |
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Credit unions returns earnings to
members in the form of lower loan rates, higher savings rates, and free or
low-cost services. |
Banks returns profits to
shareholders. |
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Each person who deposits money
into the credit union is a member with a share of ownership. |
Customers have no ownership in
the corporation. |
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Credit unions are controlled by
Board of Directors elected by members (YOU). |
Banks are controlled by
stockholders who elect the Board of Directors. |
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Credit union board members are
volunteers. |
Bank board members are generally
paid for their service. |
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Credit unions are only allowed to
serve a select group of individuals that have a common bond such as where
they work, live or even their religion. |
Banks can serve anyone in the
general public. |
While consumers may think that credit
unions look like banks from the outside, they are very different on the inside.
Credit unions and banks typically offer similar products and services, which can
frequently lead to confusion.
How does everyone
benefit from credit unions?
Credit unions provide numerous
benefits to not only their members but also to consumers and communities. Credit
unions make a difference in the lives of all Minnesotans.
Minnesota credit union members save approximately
$2.1 million a year by using a credit union rather than a bank.
This savings works out to about $140
per a member and $266 per household. Credit unions are able to offer these
savings because they exist to serve members not profit from them. The profits a
credit union makes are returned to members in the form of lower fees, better
rates on loans and more services. (CUNA Research & Statistics)
Credit unions create competition in the financial
services industry. When financial institutions are forced to compete with one
another, they must work hard to provide quality services at competitive rates.
In 2007, bank consumers nationwide
saved approximately $6 billion due to the presence of credit unions in the
financial marketplace. (CUNA Research & Statistics)
It is the top priority for credit
unions to improve services for members, not to increase profits for
stockholders. When credit unions provide exceptional service to members, they
raise the bar for other financial institutions. Ultimately all consumers
benefit.
Credit unions have a history of giving back to
the communities they serve. Credit unions have repeatedly proved that their
philosophy of “people helping people” is an everyday way of doing business.
Credit Unions: An Important Financial Choice!
Individuals at a credit union own the
organization where they save, borrow, and obtain financial services.
The Importance of Credit Unions in Minnesota
Credit unions are important in the state’s
financial system because their operation puts people before profit.
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Competition:
Competition between financial service providers
ultimately benefits the consumer. When financial institutions are forced to
compete with one another, they must work hard to provide quality services at a
competitive rate.
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Choice:
Credit unions do more than just add to the
number of financial institutions in the marketplace – they offer a completely
different business model for providing financial services to consumers.
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Standards:
The top priority for credit unions is to
improve services for members, not to improve profits for stockholders. When
credit unions provide exceptional service to their members, they raise the bar
for all other financial institutions. Ultimately all consumers benefit.
Who can belong to a credit union?
Credit unions are restricted to only serving
those connected to one another by a common bond. Members may all work for the
same employer or in the same industry, be affiliated with a particular
organization or religion, or live in the same geographic area.
Who owns a credit union?
When a person joins a credit union, they become
one of the owners and shareholders of the institution. The democratic nature of
credit unions allows all members to have an equal voice in the operation of the
organization regardless of the amount each person has on deposit.
Who receives the profits in a credit union?
As not-for-profit cooperatives, credit unions
return revenue to members in the form of fewer fees, lower rates on loans and
higher rates on savings. Credit unions are not owned by a group of stockholders,
meaning that all members benefit, rather than a select few. |
