ARCHIVED  August 1, 1997

How to choose a credit union

Credit unions are financial institutions that fill many of the same needs as banks but which are different in their conception. Credit unions are non-profit cooperatives owned by the membership. And because each credit union has a strict “field of membership,” not everyone can belong to any credit union. In effect, then, the credit union chooses the member/customer rather than the other way around.

Field of Membership

Originally, credit unions were formed as a way for people in the same occupation or field to pool their financial resources.These days, the definition of “field of membership” has expanded to include geography as well as occupation. Teachers have credit unions, federal workers have credit unions, and employees of big companies have credit unions. However, anyone living in a designated region or in a specific city, for example, can belong to a credit union whose “field” is that geographic area. Moreover, a company without its own credit union can apply for “employee group” status in a city or regional credit union. As a result, virtually anyone who is employed or who lives in an area with a chartered credit union can become a member/shareholder by opening a share account for as little as a dollar.Credit Unions and Banks
The defining difference between a bank and a credit union is that a bank – even a small, independent bank – is owned by anonymous shareholders and a credit union – even a huge one with millions in assets – is owned by the people who deposit their money there. Because of the non-profit status of credit unions, all profit beyond what is necessary for operating costs and salaries goes back to members in the form of services and higher interest on accounts. An elected volunteer board of directors is responsible for setting policies for management and staff.
Like bank accounts, credit union accounts are insured up to $100,000. by the National Credit Union Share Insurance Fund (similar to the FDIC) which is backed by the full faith and credit of the United States government.
While banks see credit unions as competing for business in the cloak of non-profit status, credit unions see themselves as a choice. Credit unions make no commercial loans, and so benefit businesses indirectly by benefiting employees.Variability in Credit Unions
The bottom line for credit unions seems to be a matter of control. Members value the fact that they own the credit union and that all profits will be returned to them in interest and services.
All credit unions have lists of their membership specific services that are driven by the needs of shareholders. Therefore, an individual eligible for membership in more than one union will want to look carefully at the variability in services. Aside from the fact that credit unions offer higher interest rates on savings and money market accounts than do banks, some unions have extensive opportunities for car loans and mortgages while others offer a different array of services such as dental insurance or financial planning.For “field of membership” information, call The Colorado Credit Union League at (800) 477-6240

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Credit unions are financial institutions that fill many of the same needs as banks but which are different in their conception. Credit unions are non-profit cooperatives owned by the membership. And because each credit union has a strict “field of membership,” not everyone can belong to any credit union. In effect, then, the credit union chooses the member/customer rather than the other way around.

Field of Membership

Originally, credit unions were formed as a way for people in the same occupation or field to pool their financial resources.These days, the definition of “field of membership” has expanded to include geography as well…

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