What Are the Benefits of Credit Unions?

Money SmartsApril 19, 2024

When you join a credit union, you become part of a financial institution that is more than just a place to bank. You’re part of a global movement of more than 393 million members around the world who follow the long-held credit union philosophy of “people helping people.”

But what exactly are the differences between a bank and a credit union, and how do credit unions benefit members?

Read on to learn more about the seven key benefits of credit unions.

1. Credit Unions Are Member-Owned

Unlike banks, which are owned by shareholders and return profits to their owners, credit unions are not-for-profit financial cooperatives, owned by their members — or customers.

There’s a common misconception that it’s hard to join a credit union. While it used to be true that most credit unions were based on a “common bond” approach and members had to work at a certain organization or worship at a specific church to be able to join, many credit unions now have community charters. This means if you live in a certain geographic area, you may be able to join a local credit union.

2. Credit Union Members Have Voting Rights

All credit union members are allowed to vote on important credit union decisions, including who sits on the volunteer Board of Directors. That’s because when you become a member, you also become a co-owner of the credit union.

Credit unions are required to invite members to join their annual meetings, where their Board of Directors and executive leadership team presents the previous year’s financials and plans for the upcoming year. Members can also vote on policies. This ensures that a credit union’s decisions are made in the best interest of their members.

3. Lower Loan Rates, Higher Savings Rates, and Reduced or Eliminated Fees

Because credit unions are not for-profit, they give back to their members in the form of lower rates on loans, higher rates on savings, and reduced or eliminated fees.

As not-for-profit organizations, credit unions often focus on serving underbanked populations. This includes offering loans that help build credit, as well as checking accounts for those who need to rebuild or establish positive financial history. 

4. Credit Unions Provide Financial Education

Credit unions recognize that for individuals to achieve their financial goals and contribute meaningfully to their communities, they first need a solid foundation of financial knowledge.

To that end, many credit unions provide workshops and educational opportunities for members and the community so they can improve their financial literacy. In fact, credit unions offer financial education services that some banks don’t — such as housing and financial counseling.

5. Credit Unions Are Community Focused

When members bank with credit unions, they’re not only doing it for the betterment of their own financial well-being, but for the empowerment of their local communities. Because outreach is at the heart of credit unions’ core values, they work hard to provide valuable resources and tools for individuals striving to secure their financial future.

Credit unions also often offer volunteer opportunities for employees to contribute meaningfully to their local communities, such as working at food banks, reading to children, cleaning up communities, and participating in financial literacy workshops.

Some credit unions offer scholarships to members and employees. Together with their employees and members, credit unions truly make a difference, empowering people to transform their lives through improved economic stability and financial freedom.

6. Credit Unions Offer Cooperative ATMs and Shared Branching

Not only do credit unions share knowledge and resources with one another, they also participate inshared branching and a cooperative ATM network. This means that credit union members can visit the branches of other credit unions in their network to access banking services. With more than 5,600 branch locations nationwide and nearly 30,000 ATMs, credit union members can easily bank throughout in the United States.

7. Deposit Insurance

Banks federally insure their accounts up to $250,000 through the Federal Deposit Insurance Corporation (FDIC). Credit unions have the option of insuring their accounts through private insurance or being federally insured through the National Credit Union Association (NCUA). At GLCU, member deposits are insured through the NCUA, carrying the full faith and backing of the US government, up to $250,000.  

Key Takeaways on the Benefits of Credit Union Membership

Here are a few key takeaways about the benefits of credit unions:

• Credit unions are not-for-profit financial institutions, whose members are their owners
• Credit union members can vote for who sits on the volunteer Board of Directors
• Credit unions offer lower interest rates on loans and higher interest rates on savings products
• Community outreach and financial education are at the heart of the credit union philosophy of “people helping people”
• Credit unions collaborate with other credit unions, including participation in shared branching and ATM networks
• Member deposits are privately or federally insured

When you bank at a credit union, you can rest assured that you’re contributing to the greater good and the betterment of your community, supporting financial empowerment and the credit union philosophy of “people helping people.”

As a not-for-profit credit union, GLCU promotes the financial well-being of our members. In addition to our many educational resources and outreach efforts, we also give back to our members in the form of reduced or eliminated fees, higher savings rates, and lower interest rates on loans. Check out our rates and consider opening an account today.

The information in this post is for educational and informational purposes only and does not constitute investment advice. You should consult a licensed financial advisor before investing in any financial product or service.

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