A credit union is a not-for-profit financial organization that exists to serve its members. In fact, years ago the common credit union tagline was "not for profit, not for charity, but for service," meaning any profit earned by the credit union goes directly back to benefit members of the organization. This is still true today and it’s what makes credit unions, cooperatives.1
Today, more and more consumers are choosing credit unions as their primary financial institution for their everyday banking needs. As of early 2019, approximately 118.9 million U.S. consumers were members of and found value in credit unions.2
Still, for some consumers, credit unions remain a mystery. What really is the difference between a credit union and a bank? What does it mean to be a member of a credit union? Can you join?
What Are Credit Unions and How Do They Differ from Banks
There are three distinct differences between credit unions and banks. First, credit unions are not-for-profit. They seek to serve the community and their members by providing better financial solutions. Profits made go back to members in the form of higher deposit rates and lower interest rates on loans. Second, when you join a credit union or become a member, you become a member-owner. As a member-owner, you can help shape the direction of the credit union by voting for volunteers on The Board of Directors, who are also members. Third, credit unions live by the philosophy of “People Helping People,” meaning they are committed to doing things in the best interest of the communities they serve and their members.
Let’s clear up some common credit union misconceptions:
Myth #1: It isn’t easy to join a credit union.Reality: Becoming a member of a credit union isn’t as difficult as you might think. Eligibility is frequently based on where you live or work. Some credit unions have eligibility requirements based on: profession, college alumni status, and religious organizations – it just depends on the credit union. These requirements simply ensure they are upholding their mission of serving members of their local community.
Myth #2: Credit unions don’t provide easy access to money.Reality: Credit unions offer many options for convenient access. You may find that your local credit union has partnered with various ATM networks to make access to money easier. In addition, most credit unions offer both online and mobile banking In fact, credit union members ranked their mobile and online banking experience higher in satisfaction than that of banks; four-points higher for mobile and one-point higher for online banking.3
Myth #3: Credit union technology is lacking.Reality: Many credit unions offer top-rated, cutting-edge online banking and mobile app solutions to help their members conveniently manage their finances 24/7. These services frequently come equipped with: card controls, personal finance tools, online switch kits, mobile deposit, smartwatch Additionally, many credit unions offer online account opening and digital wallet options.
Myth #4: Credit unions don’t offer the same products as banks.Reality: In most cases, credit unions offer a similar product lineup as banks and you’ll often find better rates and fewer fees. Credit unions offer some of the best financial products on the market, such as: free checking, credit cards with rewards, high interest-earning certificates, competitive mortgages, and other great products and services. When you’re in the market for your next loan or deposit account, be sure to check out the options your local credit union offers.
Myth #5: Money is not backed by the government.Reality: While a bank is insured by the Federal Deposit Insurance Corporation (FDIC), credit unions are insured by the National Credit Union Administration (NCUA), an agency of the federal government; they are equivalent to each other. Both provide insurance for depositors and take precautionary measures to help reduce risk.4 In fact, no member of a federally insured credit union has ever lost a penny.5
The truth is, becoming a member of a credit union is one of the best financial moves you can make! Their commitment to serving members of their community is evident through their mission of harnessing meaningful relationships, while ultimately improving their members’ financial well-being. Yes, you can experience banking like this!
Did you know General Electric Credit Union (GECU) was chartered in 1954 for employees of General Electric Aircraft Engines (or GE Aviation), and since then, has grown to be one of the largest credit unions in the State of Ohio? GECU serves the communities of Greater Cincinnati, Northern Kentucky, and Southeast Indiana. Discover the credit union difference and learn more about membership and eligibility.