Everything you need to know about Credit Unions

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Credit Unions are unions created by people who are their own members. The purpose of every Credit Union is to cater to the financial needs of its members. A credit union differs from a bank in various ways. Choosing a credit union has its own advantages and disadvantages over banks.

Benefits of Credit Unions

And, so here are the drawbacks and benefits of Credit Unions in comparison to banks.

1. Account holders are the owners: the banks works on the stake-holders who do not care for the rising transaction charges, rising loan interests, or any other type of problems that make the customers of a bank suffer. All they worry about is making money and nothing else. No matter how much they try to rationally explain their rising costs, we know their stake-holders are all but worried about gaining more money, and so, a bank truly never worked for the customers.

Image courtesy:Times of India
Image courtesy:Times of India

But on the other hand, Credit Unions have a completely different set of stake-holders.         The stake holders are the customers of the Credit Union itself. That is one of the biggest     benefits of Credit Unions. As, the customers will always have a problem with rising             interest and transaction rates, so the transactions with the Credit Unions is generally           either fixed (unchanging always) or is completely negligible. This gives more value and       causes less financial loss every time you use your Credit Union card to make a purchase,     and hence, it makes the Credit Unions way better than the banks.

2.The Non-profit nature of the Credit Unions: While all the banks are for-profit organizations, which are only central to making money, they all function to fulfill their own monetary needs. While the customer has to keep up with their tyrannical regime, where they take your money while leaving you in a mountain of increasing debts.

The Credit Unions, on the other hand work with a non-profit nature. While, it is impossible to work without profit for any organization, what makes Credit Unions better is that they are not obligated to make more profit. And the result of that is, that the customers get a better way of profit sharing which is distributed among all members. And this not-for-profit nature also exempts the Credit Unions of paying federal taxes which adds onto the benefits of Credit Unions.

3.Less fees and high savings: The banks charge you with fees on everything, for transferring money, for drawing your own money, and by making any kind of transaction anywhere. You have to pay money for everything while working with the banks.

Image courtesy:Flickr
Image courtesy:Flickr

And this only blows a bigger hole in your pocket; you had only opted for banks, because you wanted them to keep track of your money and not to just increase your debt. And that is exactly what happens when you work with a for profit organization.

Credit Unions charge way less fees and do, much more for you than to just hold your money. They give you higher interest and provide you with more options of the profit sharing with the union. This makes it one of the most remarkable benefits of Credit Unions.

Drawbacks of Credit Unions

But just like everything else in the world, even Credit Unions have a few drawbacks to them. And so, here they are in contrast to the benefits of Credit Unions.

1. Restriction of ATMs: Credit Unions have fewer ATMS, than banks do. This is of course, quite obvious due to the sheer size of the banks which can have their automatic tellers all over the country and even the world.

Image courtesy:Flickr
Image courtesy:Flickr

This is only a slight disadvantage because; Credit Unions cards can also be used on all ATMS, but might cost you a transaction fees, which you were trying to absolve in the first place. Although many Credit Unions have tie-ups with many banks, that first cut transactions fees from your account, but then they later reimburse you with the transaction fees.  This is truly breathtaking as it makes it a part of the benefits of Credit Unions.

2.Restriction of membership: Here’s the final elephant in the room. Credit Unions work with small, strictly intertwined communities, which sometimes do not allow membership of someone else. They work in focus groups with high trust and so are able to accomplish a lot.

But as the times are changing, even the Credit Unions are working to expand; the peer-to-peer sharing services have allowed Credit Unions to evolve their circle of trust. And maybe with Blockchain, it might be possible that Credit Unions will finally be able to surpass the influence of banks and do wonders.  After all, the benefits of Credit Unions seem to be outweighing the drawbacks.