When it comes to choosing a financial institution to manage your finances, there is one model that stands out head and shoulders above the rest. While many people opt for the traditional bank, credit unions have been garnering more and more attention in recent years.
Despite the fact that banks are more prevalent in our society, when we take a closer look at credit unions, their organizational structure, and their perks, it becomes clear that credit unions are, in fact, the premier financial model.
Members are Owners and Owners are Members
Credit unions are, at heart, financial cooperatives. They are owned and operated by members, with boards of directors elected democratically from their group of members. This means that, if you join a credit union, you become an owner-member. You will have some say in how the credit union operates, and you could be chosen to be part of the credit union’s leadership.
This system is a far cry from banks, where external investors and shareholders keep boards of directors focused on generating profits and returns on investments for these shareholders. The importance of this can’t be understated because the lack of investors - and having to answer to them - allows credit unions to pump all the benefits of success back in the direction of their owner-members.
As well as all the financial benefits that come from the credit union model, which we will circle back to shortly, the organizational structure and the local focus create a financial institution that reflects the values of its community of members. Such a cooperative mentality will not be found at rival institutions.
Credit Unions are Non-Profit Organizations
One interesting fact about credit unions that many people do not realize is that they are non-profit organizations. This often surprises people whose only financial experiences have been at banks, where the focus is always on generating profit for shareholders.
As non-profit organizations, however, credit unions pump their success firmly back in the direction of their member-owners. Any profits earned - after operating costs are accounted for - are returned to members in the form of dividends, lower rates on loans, or higher yields on savings products.
What this means is that, at its essence, the primary goal of a credit union is to provide the best service possible to its members. This method of conducting business perfectly encapsulates the community-focused nature of credit unions.
When we speak about communities and credit unions, the intrinsic link goes far beyond the financial benefits from lower rates and other perks. Credit unions are central to the functioning of many communities in which they operate.
Growing Savings, Growing Communities
Credit unions are established to serve a particular community or group of people. While these groups can be identified geographically, they can also consist of members of a particular place of worship, or current and former members of a particular organization.
Such focus on a small community allows credit unions to tailor their services depending on the needs of that community. This means that if a certain community was home to a large number of small businesses, their local credit union would likely offer specialized loan products or accounts that are tailor-made to help small, local businesses grow.
Similarly, if a credit union is set up in a disadvantaged area with little to no history of financial education on offer, that particular credit union may offer financial education programs, or even sponsor local events on the topic to help promote financial literacy in the local community.
Financial Benefits of Credit Unions
As well as the non-profit structure, and the focus on helping local communities, credit unions offer an array of practical, financial benefits to members.
As mentioned above, any success is shared with members. This means lower interest rates on loans and credit cards, higher interest rates on savings accounts, and the possibility of dividends are all perks that members can look forward to.
Credit union members also gain from the flexibility that their financial institution allows. Unlike banks, credit unions are open to working with members who have less-than-perfect credit. At credit unions, your track record won’t be held against you, and you can often avail of the loan you need despite your credit score and financial history.
When you add to these great benefits the fact that credit unions are much more risk-averse than their competitors and are insured by the National Credit Union Administration (NCUA), it becomes clear as day why more people are deciding to make the switch and manage their finances in a credit union.
Make the Switch to Riverways
As we’ve seen, credit unions are rightly taking their place as the premier financial model for members. With service offerings just as comprehensive as banks, and ever-improving digital and mobile banking options, credit unions are likely to maintain their healthy market share in the coming years.
The non-profit structure, the focus on community, and the member-owner hierarchy make them the ideal choice for people looking for a financial partner that has their best interests at heart.
If you are ready to find your financial partner that has your best interests at heart, look no further than Riverways Federal Credit Union.
Contact Riverways today to take the first step on your journey with a financial institution that is positively different.