The credit union is just like a financial cooperative which offers financial services. Credit unions are of different sizes, from small-scale to large-scale units. These unions are for employees and members of any organization. Participants of these credit unions create and operate these unions.
Model of the credit Union
A credit union follows a business model, which means they have many members who invest their money. They buy shares and provide loans and funds to others. They use this income for projects and offer beneficial services to the community. They work purely for the interest of their members and participants.
Previously, membership was only allowed to those working in the same organization or living in the same community. Credit Unions have removed this restriction and allowed the general public to join a credit union.
How to Join a Credit Union
If you want to join a credit union, you must first open an account with a minimum amount requirement. As soon as you open an account, you will become a member. You can then participate in all affairs of the credit union. You can give your vote to elect the board of directors. You can participate and give your valuable opinion on decisions taken by the credit union.
Requirements to Open an Account
Opening an account at a credit union is easy and convenient. You can open an account with a minimum amount of only $5. You can apply online and fill an online request by giving all the necessary information online. Once your account is open, you can access thousands of services. You can open a personal account, youth account, trust account, and business account.
Pros of The Credit Union
As the credit union attracts investors to invest and join them. They operate their business just like banks. There are two major advantages of a credit union.
- They only need money to operate their day-to-day affairs.
- They are exempt from corporate income taxes.
There are other benefits, too, as explained below.
- Credit unions can save money for the members and shareholders. They save money on loans and accounts.
- They help their members to control their financial future.
- You can make payments and apply for a loan.
- They build lifetime relationships and empower members to achieve their best lifestyle.
- Members can access their accounts anytime and perform transactions.
- They are trusted financial partners that help members to achieve their goals.
- They also offer services like online banking and online payments of bills.
Cons of The Credit Union
- Few customers prefer in-person services but credit unions mostly offer online services.
- Credit unions have less budget to improve their technology.
- They provide fewer options and services as compared to the banks.
- They don’t offer timing flexibility to their clients and customers.
Difference Between Credit Unions and Banks
Credit unions are small-scale entities, but banks operate on a large scale. Credit unions have fewer branches compared to banks. Credit unions don’t generate profits, so they have lower fees, higher rates on savings, and lower borrowing rates.