Since the banking crises in the late 2000s, more and more people are considering the benefit of joining a credit union. Unlike a conventional bank, a credit union is a non-profit entity that is comprised of members. Members are every financial account holder with the credit union. Essentially, if a person decides to bank with a credit union, they become a member of that non-profit.
Credit unions are seen as beneficial banking institutions to local economies. A credit union in Houston tends to focus on Houston customers and Houston financial investments. This is because the members of such a credit union would be residents of the Houston metropolitan area. As a result, a member has the power to voice their concerns, thoughts, and opinions over banking actions. Therefore, local members to a credit union would most likely voice banking policies that engage with the local community over profit-making.
The profit-making is an essential variable to all credit unions. As non-profits, credit unions re-invest all profits back to the credit union and their account holders. The profits can help lower banking rates or can be calculated into dividends that are given to each member’s account. In addition, credit unions are exempt from most federal and state taxes since they are non-profit entities. Therefore, banking rates and fees tend to be low since credit unions have a lower cost of doing business.
Like any non-profit, the credit union is governed by a board, which needs to reply to all members. Members can voice their opinions and banking policy recommendations at board meetings or by contacting the board directly. Unlike a customer service line, the board has to listen to the members and take their considerations seriously since the members are essentially stockholders to the credit unions.
With all of these interesting benefits to credit unions, why are there not more people who sign up for credit unions. The answer lies in the fact that credit unions tend to have a very specific application process so a person is eligible to be a member in the first place. In addition, many people may prefer conventional banks since their for-profit status tends to make them larger with more regional and even statewide services.
The general guideline to join most credit unions is to open an account with a minimum amount of money, identification like a driver’s license or Social Security, and to pass a Homeland Security background check. Some credit unions may only network to specific clientele. One popular example is that some credit unions are open to business clients, and the workers of those businesses can become members of the credit union through their employer. However, community-based credit unions are typically more open to who can be a member. Becoming a member allows the person to have access to the credit union’s ATM, possessing a debit card, 24/7 customer service, and online banking. Most credit unions, once they accept a person’s membership, will ease the membership requirements for that member’s immediate family.
Becoming part of a credit union can be an enriching experience for many people who want more than being a customer to a conventional bank. Check around the Houston area for a local credit union today.