At first glance, it’s an easy mix up. Credit unions and banks both offer financial products and services. Both institutions earn money from fees and interest on loans. But that’s where the similarity ends.
Look more deeply and you’ll find significant differences. Let’s start with banks.
Bank customers are just that – customers. Bank profits go to shareholders – those who own stock in the corporation. Those shareholders may not even have an account with the bank they hold stock in.
Banks can be small or large, from multi-nationals to regional and community based. The smaller community banks typically offer products and services more specific to their regions than the big banks; however, they’re still profit-driven institutions with shareholders to please every quarter, and they benefit from charging late fees, returned check fees, and higher loan rates.
So what do credit unions do differently, and why does it matter?
Credit unions are not-for-profit cooperatives where customers are member-owners. What that means is credit unions are essentially of the community, and for the community they serve. They’re governed by a board of directors made up of volunteering member-owners, who are ultimately responsible for the credit union’s financial health.
While proceeds earned by credit unions are re-invested in the day-to-day operations, they’re also returned to members in various ways, like lower fees and loan rates, as well as higher interest on deposits and the expansion of branches, ATMs, technology, and services. What ultimately makes credit unions different, though, is how they show up for their members.
The board and employees have a vested interest in your financial success, so it’s common for credit unions to host home-buying workshops, savings workshops, credit counseling, and at Seattle Credit Union, workshops for those interested in becoming US citizens. They’re present at local community events, they roll up their sleeves and donate their time, and they sponsor and support causes their members care about.
They may look like banks from the outside, but credit union representatives are there to help, with your financial interests in mind.
Some say they prefer banks because of convenience, but credit unions address this by creating shared networks. This means credit union members can use the services of other credit unions for free, all across the U.S. and in a few participating countries. And most credit unions are technologically savvy these days, with comparable online and mobile services to the big banks. Mobile, a relatively new way to bank, has built-in safety features and is often considered more secure than ATMs or other options.
Credit unions got their start in the early part of the 20th century by groups of people who shared an affiliation, like a group of employees. For example, Seattle Credit Union was founded in 1933 as City Credit Union to support City of Seattle employees. Banks at that time were less likely to loan money to people who worked in the trades and made decisions subjectively.
Credit unions became official as part of President Franklin D. Roosevelt’s New Deal; the Federal Credit Union Act was passed in 1934 to provide oversight. In 1948, the Bureau of Federal Credit Unions (now the National Credit Union Administration, or NCUA), was formed as the regulating body. Credit union funds are insured, just like banks, but by NCUA, rather than the Federal Deposit Insurance Corporation (FDIC).
Membership is easy. Any person who lives or works in the state of Washington can be a Seattle Credit Union member. For more information about us, drop by a branch, give us a call at 206.398.5500, or click here to join now.