*I’m so excited to bring you the first of a few articles that I wrote in partnership with Digital Federal Credit Union, DCU*
For my childhood and most of my adult life, I’d only been exposed to traditional big banks. After doing more research, talking to others who were credit union members, and teaming up with DCU – Digital Federal Credit Union, I was amazed at how well and in some ways, how much better, credit unions stacked up against traditional banks. Were you aware of the powerful impact you could have on your community by being a member of a credit union?
What is a Credit Union?
First let’s start out by defining what a credit union is. A credit union is a member-owned financial cooperative. Credit unions are owned and controlled by the people or members who use their services. Credit unions, like banks, accept deposits, make loans and provide a variety of financial services.
As opposed to big traditional banks that are for profit, a credit union is a not-for-profit financial cooperative, run by a volunteer board and those that bank with a credit union are members and owners. Profits made by credit unions are returned back to members in the form of reduced fees, higher savings rates and lower loan rates.
Your credit union uses the money that you and other members deposit to make loans to other credit union members.
What’s even more unique is that everyone who has an account at a credit union has an equal say, no matter the amount of money in their account – whether it’s $50 or $150,000. By design, credit unions are set up and run by the people and community for the benefit of the people and community. When you join a credit union, you are required to open and maintain a share account also known as a savings account. The dollar amount that’s required to open the account varies at every credit union. This share account also serves as your right to vote for such things as electing the credit union’s board of directors.
It’s also important to note that banking at a credit union does not mean that you are sacrificing quality of services or competitive rates. While credit unions are not-for-profit organizations, they are hyper focused on providing their members profit and competitive financial instruments comparable to a for-profit traditional bank.
Here are some other Credit union myths, debunked:
Credit Unions are hard to join– Credit unions are not as hard to join as you may think. While all credit unions have some type of requirement to join, each credit union is different. Sometimes all you need to do is live, work, worship or volunteer in the neighborhood that the credit union serves. Some of the ways that you can join DCU are through a family relation, employment at select companies, membership at select associations, or if you reside in a particular geographic area.
Money at a Credit Union is more at risk- If you think your money is safer at a traditional bank versus a credit union, think again. Your money is no more safe at a traditional bank than it is at your local credit union. Just like the FDIC insures deposits up to $250,000 at a traditional Bank, deposits up to $250,000 at a credit union are insured by NCUA (the FDIC and NCUA are both federally backed agencies).
Credit Unions are behind on technology- The credit union industry has come a long way from the antiquated style of banking that they were once known for. Nowadays, the technology that credit unions use is just as advanced as that of traditional banks. Most credit unions have online banking options and features such as mobile check deposits, smart chip readers on cards and apps for cell phones. For example, DCU offers its members online and mobile banking services that allow them to conduct most banking transactions from anywhere at any time, without even visiting a branch.
Limited access to money through ATMs- You can access your money held at a credit union at any time from mostly any ATM just like you would if your money were at a traditional bank. Most credit unions are part of a large participating network of ATMs that are surcharge free. Members of DCU have access to over 80,000 surcharge free ATMs nationwide that display the Allpoint, SUM or CO-Op logos. DCU also reimburses members for non-DCU ATM surcharges that they may incur if they use an ATM outside the surcharge free network.
Now that we’ve debunked some popular credit union myths, let’s explore the real benefits of banking with a credit union, the credit union advantage:
1. Personalized service: Because credit unions are banks for the people, by the people and typically have smaller memberships than the typical banks, you are able to get customized personal service. It’s much more of an intimate relationship than you would have at a traditional bank. The credit union employees actually know you and are invested in your success as a member.
2. Competitive rates & products: Credit unions offer competitive rates to those offered at traditional Banks. For example, at DCU, their Free Checking product has an Earn More feature that allows members to benefit from a competitive Annual Percentage Yield (APY) on balances of up to $25,000.
3. Supporting your local community and members The money you deposit at your local credit union directly supports your fellow members and community. Members deposits are turned into loans given back to members to help them build business, buy homes and improve their lives.
4. For the underbanked and underserved At their core, credit unions were founded on the philosophy of people helping people. For individuals that might find themselves part of underbanked or underserved communities, credit unions offer individuals a safe place to manage their finances or help fund purchases as an alternative to other financial service providers (i.e. payday lenders).
At DCU, the credit union places an enhanced focus on financial education by offering learning modules on key financial topics like budgeting, saving for the unexpected, building credit and much more. DCU also offers a secured credit card that helps individuals establish or improve their credit by borrowing securely against their savings balance.
Choosing to bank at a credit union is not only beneficial for your wallet but for your community too. You can improve your financial health and make a statement with your dollars by choosing where you bank. With the lack of accessibility and trust that most people have with the traditional banking system, credit unions are a direct solution to leveling the playing field for resources and accessibility.
You’re not just another customer at a credit union, you are a member who matters.