Credit Union Account
Credit Unions are cooperative financial institutions owned and controlled by their members to whom they provide a range of financial services. Essentially, financial services provided by Credit Unions are equivalent to those services supplied by main banks and savings and loans institutions. However, due to the nature of the Credit Unions, interest tends to be higher than that offered by banks, and loan interest tends to be lower. This situation arises because Credit Unions only have the interests of their members at heart, while banks and S&L’s are constantly trying to maximize their profits to support their share price.
Credit Unions offer many of the services familiar to regular banking clients. These include savings accounts, checking accounts, money market accounts and term deposit accounts. However, for historical reasons the Credit Unions use different names for these financial instruments. Checking accounts are called “share draft” accounts, savings accounts are called “share” accounts, and C.D.’s are called “share certificate” accounts. In common with most bank savings accounts, Credit Union savings accounts are also protected against financial default by the parent institutions. While regular bank savings, checking and money market accounts are protected by the federal government’s FDIC. Credit Union accounts are insured by an equivalent institution called the National Credit Union Association, or NCUA.
While regular banking institutions are profit based, Credit Union accounts offer their members services on a non-profit basis. For this reason Credit Union members benefit from the lower levels of loan interest as well as the higher deposit premiums. Of course, like any other business, Credit Unions must be competitive. They have expenses and staffing costs just like the banks or savings and loans institutions. Credit Unions will therefore also be “in the market” for the best deals, but their target of satisfaction is their members’ wellbeing rather than shares dividends of banking stockholders.
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