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Why Use a Credit Union Rather than a Bank?

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Making the choice to invest money in a credit union, rather than a bank, is often a decision that reflects cooperative values and community-building intent. Credit unions and banks offer a similar suite of products and services, but they are formed and run in very different ways.

 

Cooperative, Federally Insured, and Member-Owned

Both credit unions and banks are federally insured and state-chartered credit unions and banks are regulated by the Vermont Department of Financial Regulation; a credit union is a not for profit entity that is owned by its members, while a bank is a for profit entity that is owned by external stockholders.

Because credit unions are not for profit, they are able to give back to their members through better rates on loan and deposit products (click to tweet). Credit unions are also cooperative, member-owned financial institutions. They often have a strong social mission and exist primarily to serve members (not stockholders).

Here are some of the biggest reasons people choose to invest in a credit union rather than a bank:

Not for profit – Credit unions are not for profit financial cooperatives that provide a safe, convenient place for members to save money and access loans and other financial services at reasonable rates.

 

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Equal Ownership – Credit unions are democratically controlled and member-owned and operated. Each member has equal ownership and one vote regardless of how much money he or she has in his savings.

Social Purpose– Credit unions exists to serve their members, not to make a profit. Every member counts, including those of modest means. This “people helping people” philosophy impels credit unions and their employees to get involved in their community and support worthwhile causes.

Trust – Credit unions have received positive press for being trustworthy and resilient institutions during a tumultuous time. Credit unions members worldwide can be proud of these accomplishments and rest assured that their money is safe at the credit union.

Volunteer Leadership– Each credit union is governed by a volunteer board of directors elected by and from credit union’s membership.

Financial Education for Members– Credit unions place particular importance on educational opportunities for their members and the public to help everyone become better-educated consumers of financial services.

As a member-owner of a credit union, you have a lot of power in determining how your money is invested. You vote for the volunteer members of your Board of Directors (or volunteer as a board member yourself) and therefore have a voice in the decisions that are made regarding your money. You can also feel good about placing your money in a safe place, where profits are not lining the pockets of the stockholders, but are returned to you and your community.

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