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How Are Credit Unions Different From Banks?

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  • How Are Credit Unions Different From Banks?

    Are you looking for a new place to store your money? Credit unions are an alternative to banks that more and more people are choosing to use. Whether you are an individual with large amounts of wealth, you have low income, or you are a small business owner, this option may benefit you in a variety of ways. You'll also find it relatively simple to purchase a home or car as well as lower rates on loans. Many people view this kind of financial institution as a more stable alternative to commercial banks. This industry has been growing more and more over the last few years, and many people are turning to these alternative institutions to get loans and store their money. They are typically community based and offer friendly customer service. So how exactly do they differ from typical commercial banks?

    Credit unions are not for profit organizations, typically locally operated and based within its own community. A bank is operated as a business. Like any other business, it is the corporate bank's main goal to make a profit. The goal of credit unions is to provide customers a safe place to keep their money, and a reliable place to borrow money at an affordable rate.

    Credit unions give out loans and accept deposits just as banks do, but they are member owned, meaning anyone with an account at such an institution is a part owner. In many cases, they even distribute profits to its "owners," or customers, at the end of a fiscal year. The institution decides who can become a member. Potential members are evaluated for their financial circumstance and their involvement in the community. Typically, these institutions serve people with lower income, and they provide people of modest means with affordable financial services that are usually inaccessible to them at most corporate banks.

    Funds that are deposited at both types of financial institutions are federally insured. While banks offer several branches and ATMs throughout any area, credit union consumers may find that it may be slightly less accessible than most commercial banks. However, many of these institutions offer access to a number of ATMs across any area without the need to pay a surcharge.

    While both types of financial institutions offer the typical services - savings and checking accounts, CDs, access to ATMs, customer service, and other financial services, credit unions will offer you a unique experience that you simply will not find at commercial banks. There may be a few of these financial institutions in your community, so give one a call to find out more about how to apply.

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  • #2
    Credit unions are non-profits, which mean they are customer-owned. It claim better customer service. banks generally have more branches, easier access, and better technological developments than credit unions.