“Money makes the world go ‘round.” This line, originating from the classic musical “Cabaret,” has rung true since the dawn of economic civilization.
In ancient societies, livestock and crops were exchanged for the desired goods. Wampum, beads crafted from shells and strung together, was used by Native Americans as currency. In China, strips of leather were painted in eye-catching colors and traded as an early form of paper money.
If money is such an intrinsic part of human culture, it is crucial you know what you’re doing with it.
When you think money, your mind might wander to your local bank. Many people rely on banks for their financial needs. It is true that, with recognizable names, numerous locations and more money than you can begin to fathom available to lend out, banks are synonymous with “place to deposit your cash.” But to the savvy consumer, there’s another option to explore.
Credit unions are a popular alternative to traditional banks. By definition, credit unions are financial institutions owned and operated by and for its members. Unlike banks, they are not for profit. In 2005, U.S. credit unions had amassed 86 million members. Thanks in part to their smaller size, they withstood 2008’s financial crisis surprisingly well. It’s clear credit unions are not going anywhere soon, so should you buy in?
Among the initial obvious benefits you’ll discover upon joining a credit union are the higher interest rates. Credit unions are often touted as offering “more bang for your buck.” This is generally true, with most credit unions presenting rates 4-10 times higher than those of normal banks. If you’re looking to deposit your cash into an account, think twice before heading to that bank down the road—look into your local credit union first and see what rates it offers.
Also, many credit unions charge less in fees. As a matter of fact, some services offered, such as withdrawals and electronic transactions, are free at many credit unions. Even fees charged for bounced checks and overdraft fees are usually less than those charged by traditional banks.
In addition to concrete financial benefits, many people find comfort in the more “personal” feel of a credit union. Traditional banks are “for-profit” organizations with very cut-and-dry procedures for lending programs. Those who run and manage the bank are typically seeking to achieve the highest financial gain possible.
On the other hand, credit unions, owned by the people who use them, provide more flexibility and tend to be more relationship-based. Let’s say you own small business and are looking to take out several small loans over time. If the credit union has a chance to get to know you and your habits when it comes to money, such as paying off debts on time, you will have better odds of securing the loans you need.
Along the same lines, a credit union possesses a more people-centered philosophy that provides an alternative to restraining requirements. A traditional bank would turn away someone with a less-than-wonderful credit history whose numbers don’t add up to their strict restrictions without batting an eye, adhering to a viewpoint that in the long run, one customer lost isn’t a huge deal. Compare that to a credit union, which would be more willing to work with you in spite of how bleak your financial past might look.
Financial decisions can be tough. From whether or not to spend your last paycheck on those adorable boots to where to deposit your cash, it’s a slippery swamp of choices.
By utilizing your local credit union, you can rest assured you’ve made at least one good choice. As for the boots, well, that’s your call.
