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Many people are somewhat ignorant when it comes to how a credit union operates. They do not understand that unlike banks, which are owned by shareholders and investors, these unique financial centers are actually owned by depositors. This means that the same people that are depositing their payroll checks into accounts and pulling money out of those accounts for groceries are the ones that actually have a stake in ownership of the entire operation. This fact completely changes how they are operated. Instead of worrying about making profits to please shareholders, credit union managers are more concerned with keeping depositors happy because they are ultimately who the managers will answer to. Let's take a look at some of the added benefits of these financial service centers. Because of the unique ownership situation, the credit union model offers higher interest rates for deposits and lower interest rates for loans. Again, since management is not concerned about posting a profit, they simply pass on the savings to the depositor. Another benefit of these unique money centers is that compared to banks, they are generally very small in size and number of customers. This smallness allows for excellent customer service and employees that have the time to give depositors the time and attention that they deserve. It also increases the opportunities for customers to win prizes when things such as contests and raffles are held, which actually happens quite often at these establishments. Along with top notch customer service, the credit union also has much better staying power than the local bank. In fact, banks insured by the FDIC fail at a much higher rate than these institutions that are insured by the NCUA. An example of this can be seen at the height of the economic downturn in 2011. At that time 44 FDIC insured banks had failed compared to just nine NCUA finance centers. The reason behind their staying power is sound business practice. They do not take on high risk loans because there is no strong profit motive to do so. They also do not take on a high volume of loans for this very same reason. To put it simple, less risk equates to more stability. One of the greatest benefits of the credit union is that it is governed and managed by customers. The board of directors is completely made up of volunteer customers that have your best interests in mind as well as theirs. Not only that, but as a customer, you have the opportunity to run for a seat on the board yourself. Just try to do that at a commercial bank. As originally stated, customers of the organization actually take ownership of the business. This is even exemplified through the names of its various accounts. Rather than calling it a checking account, for example, they call it a shared draft account. This is because you are drafting from the general fund that you take part in managing. As for the traditional savings account, this is called a share account to reflect that you are part owner of the business. Looking for a new way to bank? Check out this Bay City credit union: https://www.wildfirecu.org.
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