Credit Unions: A Cheaper, Friendlier Alternative To Banks

Credit Unions: A Cheaper, Friendlier Alternative To Banks
by: Paul Hazen



In Raleigh, North Carolina, new homeowners John and Jennifer Hall made a
smart decision: instead of choosing a risky mortgage scheme from a bank —
a decision that has been catastrophic for so many of their
contemporaries, the couple applied for a loan through the North Carolina
State Employees’ Credit Union (SECU).

The couple did their homework, and concluded that it made better sense to
work with a non-profit financial cooperative to purchase their first
home. Aside from lower fees and closing costs, SECU did something the
others didn't: a credit-union employee sat down with the couple to
explain the pros and cons of the various mortgage options. Because credit
union employees are non-commissioned, there was no pressure, enabling the
couple to see the credit union as a trusted advisor.

"There are so many young folks who don't realize the advantage of going
with a co-op," says John, who believes that all North Carolinians benefit
from non-profit financial cooperatives that help to keep other financial
institutions in check by ensuring citizens remain eligible for
competitive rates and fees. "Being a member can make a tremendous
difference in your financial life!"

You Belong

Are you are frustrated with your bank? You may be tired of paying endless
fees, high interest rates and receiving poor customer service. And in
light of the current financial crisis, you may find yourself among those
with good credit experiencing trouble getting a car or home loan, the
result of tightened lending standards due to the banking industry’s own.

Fortunately, you have options.

Credit unions offer are a fresh alternative to corporate banks while
providing the same kinds of services. As a credit union member, you can
open a checking or savings account, buy a certificate of deposit and get
a loan. Some credit unions can even help invest for your retirement or
take financial planning courses before you buy your first home.

Credit unions are co-operative businesses, owned by members (depositors)
who share something in common, such as where they work, live or go to
church. Because credit unions tend to be smaller and cater to a select
group of people, you can expect a more personal relationship between the
staff and the members.

Unlike commercial banks that generate profits for owners and outside
shareholders, credit unions channel profits back to members in the form
of lower fees, better interest rates and higher dividends. According to
the American Banker/Gallup poll, credit unions consistently rank high
among consumers for service and customer satisfaction every year since
1983.

Keep Your Money Safe

Credit unions have emerged as a safe haven for consumers. Because credit
unions avoided the risky loans and exotic investments that brought down
so many banks, they remain relatively untouched by the recent financial
crisis, credit union members have peace of mind knowing their money is
safe.

Credit unions are financially solid because they stick to conservative
banking practices, such as requiring down payments and income
verification on mortgage loans. While many banks were chasing ever more
exotic ways to make money, credit unions stuck to the basics.

Many people are leery of putting their funds in the hands of a credit
union because they believe the credit union isn’t FDIC insured. Nothing
could be further from the truth. Like banks and savings institutions,
credit unions deposits are insured up to $250,000 by the federal
government, providing the same level of protection for investor assets as
any banking institution.

Credit Unions Still Lending

Commercial banks have recently curtailed lending, even people with good
credit. The result is that many consumers are having trouble getting home
and car loans due to tightened lending standards.

This is not the case with credit unions, which continue making loans
available to people with good credit histories. In fact, credit unions
are now experiencing higher loan volumes as consumers turn to them in
greater numbers since the recent banking sector meltdown.

According to the CUNA, credit unions made 36 percent more small business
loans in the first half of 2008 than the same period in 2007, a
reflection in part of the ability of credit unions to lend while banks
horde cash.

Now, as conventional banks avoid lending even to credit worthy buyers,
credit unions are poised to take a much larger share of the traditional
lending business – including homes, cars and small business loans.

Join a Credit Union Today!

Though once associated with trade unions, hospitals, universities and
other large employee groups, credit unions are increasingly open to the
general public. There are also “select employee groups” that offer credit
union members to a network of affiliated businesses.

You'll find many reasons to join a credit union, including:

• Unlike many commercial banks, credit unions are still lending
• You have access to great products and services.
• Be heard. Your voice counts — your co-op truly cares what you think.
• You’ll be part of a values-based organization that puts people ahead of
profit.
• Share in the financial success of the organization.
• Contribute to a thriving local economy.
• Invest in a business that is locally owned and democratically
controlled.
• Be part of a strong and proud cooperative tradition.
• Help change the way business is conducted in America and around the
world.

As of 2005, there are 9,346 credit unions in the United States, which
means that just about any consumer can find a credit union they are
eligible to join.

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About The Author
Paul Hazen is CEO and President of the National Cooperative Business
Association (NCBA), the only cross-sector member association representing
all cooperatives in the United States. To view a video that shows why
credit unions are the better choice and for more information about NCBA,
please visit http://www.thebetterchoice.coop