If you are an individual who has spent most of your life in either America or Europe, you are most likely to have heard the term “Credit Union.” A credit union is a financial institution that offers services similar to that of banks and other development financial institutions except that it prioritizes people over profit. Most people out of Europe and USA would have never heard of credit unions because they hardly exist outside these two geographical domains.
Credit unions became popular around the turn of the decade when people started to realize that banks were just money minting machines whose only motive was to maximize profits with little care for the well-being of their customers. The members who are part of it run credit unions rather than extra vagrant paid bank executives whose salaries come out of the money of customers.
Credit unions basic purpose is the well-being of its members and the community in general. They pass on this benefit through lower interest rates or credit cards, housing and motor vehicles. Their service fees are much less than the fees that banks charge to their customers.
Banks have been in existence for centuries but if you carefully analyze their financials, the only thing you would come across is constantly increasing profits. They have very little sympathy for the money of their depositors.
The amount of interest and service fees they charge to their customers are almost double triple to what it costs them. Perhaps this is the reason you see banking as a very high-end job whose executives are paid salaries and bonuses in millions at the expense of the customers.
In credit unions on the other hand, the interest of the customers is at the heart of the organization as they are the ones who are actually running them. Credit Unions are classified as non-for profit organizations, which primarily reflects their way and purpose of functioning.
Let us give you a simple example here, if you are looking for a new car and you are applying for mortgage through a bank you are most likely to end up paying 4-5% higher interest rate to a bank as compared to if you availed the same loan from a credit union. The benefits just do not end here; you also pay a lower service fees and lower insurance charges if you are availing financing from a credit union.
Home ownership is a dream for most Americans out there. Not all Americans get a chance to buy their own houses during their lifetimes, however, those who do buy homes experience extreme difficulty in availing credit facilities due to tight regulations and huge credit history required by the banks. Most of those who do get the facility usually end up defaulting or declaring bankruptcy because the amount of interest they have to pay to the bank.
Credit unions on the other hand are most likely to give you credit facility for purposes of building your house even if you have a disrupted credit history in the past such as our student life etc. Moreover, as you would know by now, the interest charged would also be significantly lower as compared to the interest charged by banks.
So next time you want financial advice or financial credit, you know where to go to!