Opening A Credit Union Account? Here’s What You Need To Know

By Author: Credit ubion Business
Total Articles: 1
Comment this article

A lot of people limit their search to bank facilities when it comes to opening a savings or checking account. But what many people fail to recognize is that credit unions offer almost the same services as banks but with some added benefits. In fact, over the years, the market size of credit unions has only gone up in America.
Still, many people are skeptical about joining the credit union because of the lack of knowledge. Credit unions are nonprofit organizations that primarily operate on the philosophy of people helping people. Unlike the banks that are owned publicly by the stockholders, credit unions are member owned and cooperatives.
Whether you are thinking of joining credit unions in Southern California or opening an account in one of them, here are a few things that you should know about credit unions. Continue to read till the end to find out more.
Credit Unions are not insured by FDIC
The FDIC - Federal Deposit Insurance Corporation was founded in 1933 as a solution to address the string of bank failures. The FDIC is responsible for monitoring banks for their financial soundness along with maintaining ...
... compliance with consumer protection laws.
It acts as an independent agency of the federal government. However, the FDIC does not overlook credit unions. Credit unions are organizations subjected to other government agencies.
Most Credit Union Deposits are insured with the NCUA
The FDIC offers an insurance coverage of up to $250,000 for each depositor and that’s a major benefit in terms of consumer perspective. This type of insurance coverage gives consumers a peace of mind as the money won’t be lost even if the bank fails.
However, credit union deposits aren’t insured by FDIC but the money deposited here is still insured. All of the federal credit unions as well as some of the state-chartered credit unions are insured federally by the NCUA.
As for some of the other state-chartered credit unions, they might be insured by private deposit insurance instead.
Meeting the eligibility criteria is important to join a Credit Union
All of the credit unions have a field of membership in their charters that describes who is actually eligible to join. This is to establish a premise where everyone has something in common to bond among the credit union members.
While there is a limit set for the membership, to join a credit union is much easier than what you’ve imagined. Generally, you need to belong to the same community in terms of work, live, study or anything else.
However, anyone living outside the geographical perimeters of a credit union can also become a member if there is a family member who is already a part of the credit union or if you are able to meet any other criteria.
In today’s world, joining membership has become more open rather than a closed group thing.
Once you become a member, you are always a member
If you are able to meet the membership criteria then you will be successfully joining the membership of the credit union. Once you are a member, you can stay in the membership for as long as you want to your original qualifications.
This means you become a member for life. So, even if you go and settle in a new city or change your employment, you are able to keep and use your credit union membership. Therefore, regardless of what happens, you always stay a member of the credit union.
Different terminology may be used for Credit Unions
Making a deposit at your credit union account might have different terminology in terms of credit union premises in comparison to a bank. Credit union accounts may be known as share accounts rather than the savings account named in bank facilities.
Also, the certificates of deposit might be changed and termed as share certificates in a credit union premise. While the terminologies can be different, their functionality remains unchanged.
The most significant difference in terms might be that in credit unions, the consumers when opening an account are called members instead of customers. The credit union members become part of the ownership of the institution unlike the banking customers.
Each member is entitled to vote
Whether you are part of the best credit union in America or a member of a small community credit union, every member enjoys the right of voting when choosing the members who will be sitting in the seat of the board of directors.
No matter how small or large an amount you have in your account, as a member of that credit union, you get the right of one vote when making such a crucial decision within the institution.
Credit Unions may have shared branches
Even if you are a member of the smallest credit union, they may provide their members the accessibility to use your account or avail the services from multiple branch locations.
This is all due to the shared branch network structure that credit unions follow that enables members to perform several banking transactions at an office of another credit union within the same network. This literally means that credit union members are able to access several of credit union branches across the nation if they fall within the same network.
You need to have a share account
All of the credit unions require you to have and maintain a share account with a minimum balance in it. Even if you want to take a loan, this requirement stands.
A share account is just like a savings account in a bank even though it pays dividends instead of interests. This share account indicates that the person has a share of ownership of the account.
If you are interested to learn more about credit unions and all the latest things that are happening in this industry then make sure to subscribe to all business news for credit unions. Make sure to expand your knowledge in the field of credit union before you become a part of it.