If you want to open a savings account or if you need to take out a loan to finance a new vehicle or your first home, your instinct is probably to look for a bank. For decades, banks have been the foremost financial institutions for most people all over the world.
But did you know what banks are profit-driven businesses? No matter what their marketing says, banks were never meant to help people. Their main purpose is to make money for their shareholders—as evidenced by the high profits the biggest banks in the United States have made as COVID-19 ravaged the country.
Credit unions, on the other hand, primarily serve members’ interests. If you lost your job or if you’re facing financial difficulties due to the pandemic, you should turn to your local credit union instead.
What Are Credit Unions?
Credit unions are similar to banks in that they also offer savings and checking accounts, loans, online banking, and other financial services. The difference lies in the internal structure. Credit unions are financial cooperatives designed to serve all their members, placing the community at the center.
Credit unions are created, owned, and operated by their participants. Members pool their money to provide loans and other financial services to other members. Credit unions offer better banking rates because they are not-for-profit organizations. They only need to make enough money to keep up with daily operation costs, and any generated income is used to fund projects that will benefit the community.
If there is a credit union near your home, work, or church, joining it is easy. All you need to do is open a savings account and deposit a set amount of money, usually ranging between $5 and $50. This deposit gives you a share in the credit union, which means you have voting rights and you are eligible for all the offered benefits and services.
The National Credit Union Administration (NCUA) ensures all funds up to $250,000. This applies to each share owner for each account ownership category, so you can theoretically deposit $250,000 in three different credit union accounts, and all $750,000 will be insured.
How Credit Unions Have Helped People Get Through the Pandemic
Millions of people all over the world struggled financially through most of 2020. With banks tightening lending standards, many low-income people have found it difficult to get by.
On the other hand, credit unions have stepped up to help their members and their communities get through financial difficulties. Pandemic-specific loan options have popped up across credit unions all over the country. These are short-term emergency loans with rock bottom interest rates that any member can avail of.
Many credit unions now offer the option to skip payments on existing loans if members are finding it difficult to scrounge up the cash.
Conclusion
Credit unions are built upon the idea of community—members helping other members with their financial needs. This business model gives members options for high-yield savings accounts and loans with very low interest rates. Any revenue generated by a credit union only circles right back to projects and services that will serve its members. Good Neighbors Credit Union is the top credit union in Buffalo, NY. We believe that wherever you are in life, you deserve the best possible tools and resources to manage your finances. If your finances have taken a hit due to the pandemic, we understand, and we’re here to help. Give us a call today!