What Is A Credit Union? What Are The Benefits Of A Membership?

Monday, May 13th, 2019
woman with braided hair and blue shirt thinking
Updated on 06/03/2020

A credit union is a cooperative financial institution that is owned by its members. You can find the same services at these institutions as those offered by banks. The difference comes when the profits are cycled back to members rather than stockholders. As a member of a credit union, you will experience better rates along with lower fees on your deposit accounts. Find out what else sets a credit union apart from other financial institutions and learn more about how their services can benefit you.

How credit unions work

A credit union is a nonprofit cooperative where members can borrow from combined deposits at low-interest rates. The focus of a credit union is to assist its members in becoming financially successful. Members are also owners. They get to vote for volunteers to run the board of directors. To become a member, you are asked for a one-time fee and a deposit of up to $25.

The profits accrued through transactions are given back to members through better rates, more savings, educational programs, and lower fees. Your deposits are insured by the National Credit Union Share Insurance Fund. This means they are protected the same as when the Federal Deposit Insurance Corp covers a bank deposit. As a member of a credit union, your money is protected up to $250,000 per ownership category.

Products and services at a credit union are similar to a regular bank; they just use different names. A checking account is called a share draft account, savings accounts are called share accounts, and the minimum opening deposit is referred to as the par value.

The benefits of your membership

The business model followed by credit unions makes them much more customer-friendly than banks. They are designed to make members happy, create bigger profits, and establish the best customer service possible. These differences mean many of the policies (which are voted on by members) are created for members.

One of the advantages of opening a credit union account is the lower fees. You will also not have to pay ATM fees. Your overdraft charges are typically more forgiving as well. All of these benefits allow you to save more money. Here are some other benefits of a credit union membership.

  • You are given higher savings rates.
  • Interest on your loans will be lower.
  • You will be better served.
  • Your loan amounts can often be larger than those you could get at other institutions.
  • With the help of a CO-OP organization, you will have access to your money through a network of over 30,000 ATMs. Some offer low international fees and are located over 5,000 shared branches.

How to join a credit union

There are rules for joining a credit union, but doing so is simple. These can be defined by where you live, who you work for, or whether or not you are attending school. Once you are a member, you are one for life, even if you do not retain the original membership requirements. When you have established a share or savings account, you will be able to open a checking account or borrow money.

Interested in joining a local credit union?

If you live within Carson, Gray, and Hutchinson Counties, you can become a member of Borger Federal Credit Union! Whether you attend school, work, live, or worship in these counties, you can be a part of our family. We provide a range of products and services including online banking, eStatements, savings accounts, checking accounts, and loans.

Call us today at (806) 273-9506 or Contact Us by email to discover more about the benefits waiting for you when you become a member.