What Are the Benefits of Credit Union Membership?

What Are the Benefits of Credit Union Membership?

By: John T. Fenton, President and CEO of Affinity Federal Credit Union

Earlier this year, Affinity Federal Credit Union was named the top credit union in New Jersey by Forbes1. We are, of course, pleased with this immense honor. But it’s also worth highlighting not just Affinity’s strengths but that of credit unions as institutions, and why they’re often better alternatives to the major banks.

October 15, 2020 marks an important observance for us at Affinity: International Credit Union Day2 (ICU Day®), which has been celebrated globally for 70 years. In honor of this day, we wanted to highlight the benefits of belonging to a credit union, which differs from a bank in several important ways. Credit unions are similar to banks in the services they offer; they generally allow you to open checking and savings accounts, obtain loans for homes, cars and businesses, and (in Affinity’s case) provide credit cards, insurance and financial planning. Similar to banks, credit unions are insured by the U.S. Federal Government (specifically the National Credit Union Administration3), so no need to worry about losing your account balance. But what are the differences between credit unions and banks? Well, there are many benefits to holding a credit union membership that give you an advantage over entrusting your money to the banks or utilizing them for financial services.

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1. Credit union membership makes you a part owner.Credit unions, unlike banks, are based on a cooperative or “co-op” model in which the customers are also the owners (which is why we refer to them as members). This is the biggest difference between credit unions and banks. While a bank is a for-profit company that distributes profits among shareholders or individual owners, a credit union is a not-for-profit institution “owned” by its members. Therefore, you can think of a credit union membership as buying a stake in an organization, rather than paying somebody else in exchange for services. The only “stakeholders” that credit unions need to please are their members – and that includes you! According to Investopedia4, that commitment comes through "in the form of fewer fees, more services, lower interest on loans and higher dividends on deposits” at many credit unions as compared to banks.

2. Superior member service and resources.. For some, the perception of big banks is that they can be impersonal. This is the likely by-product of a business model that prioritizes profit and scale. By contrast, credit unions tend to be more localized and relatable by design, enabling credit union staff to spend more time with individual members and get to the heart of their needs. At the same time, credit unions often provide the same high-tech, comprehensive and convenient as any big bank. At Affinity, our recently launched “Here for You” campaign highlights our on-demand digital tools, including our online banking service and our mobile app, as well as 24/7 account access and no limit on your number of daily account transactions.

3. Financial education for members.Affinity also offers continuous financial advice and guidance to its members. Through the Affinity Connect Blog, our team of financial experts works to ensure that you make the right decisions when managing your money and in long-term planning. Just this fall, for the first time, we’ve collected our most relevant and popular financial advice in an e-book, called “How to Make Your Financial Comeback: Your Roadmap to Financial Wellbeing,” addressing many of the personal finance challenges impacting families at this difficult time. Unlike for-profit institutions, which may be primarily interested in getting your money, credit unions are based on the co-op model, prioritizing ongoing education and putting your financial wellbeing at the heart of their missions and values.

4. Focus on the community.As co-ops, credit unions are run by members of the community, for members of the community. This means they play a strong role in helping with the financial needs of the areas they serve. For example, the Affinity Federal Credit Union Foundation is our philanthropic arm, focusing on making impactful investments in local, grassroots charitable organizations, with a special emphasis on improving the financial lives of our members, friends and neighbors in the communities we serve. Belonging to a credit union can therefore fulfill both your financial needs and your desire to give back to society. Can you say the same about any of the big banks?

Credit union membership provides access to the same services and protections as any of the big banks, plus multiple advantages that put more money in your wallet. If you’ve already made the jump from bank to credit union, you probably recognize many of these benefits. If you haven’t made that leap, consider doing so!

This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.  

1 Retrieved from https://www.forbes.com/sites/antoinegara

2 Retrieved from http://www.woccu.org/events

3 Retrieved from https://www.ncua.gov/Pages/default.aspx

4 Retrieved from https://www.investopedia.com/financial-edge