Credit unions have always been a part of a large international movement, with more than 40,000 credit unions in many countries around the world, servicing about 120 million people.
For most of the Americans, when it comes to financial advice, they only go to the ones they can trust. A research even suggests that middle-income investors are not into big national firms nor the digital brokerages or robo-advisors. That is why one great place where Americans look at is their local credit unions, regardless if they are an investor seeking guidance or an advisor looking for a career.
How did credit union movements start?
The very first true credit unions were created by Friedrich Raiffeisen and Hermann Schulze-Delitzsch in Germany in 1852 and 1864. A credit society was founded by Raiffeisen, but it mostly relied on the support of the rich people during that time. He chose to stick to the same concept until he was able to organize a new credit union in 1984 which is the basis of the fundamental principles that are being used today.
What are the basic credit union principles?
The principles of a credit union, when it was still starting, were all very simple:
- Only the members of the credit union were allowed to borrow.
- Loans would only be made and approved for productive purposes.
- A person’s character (willingness to repay) was considered to be more valuable compared to a person’s income (ability to repay).
These may be very simple principles, but these are still the ones that govern credit unions in the world.
The philosophy of credit unions
The credit union system is made up of organizations from all levels whether it is local, state, or national. It gives the credit unions in the world the strongest support network. Because of this combined effort, credit unions have the ability to offer their members a broader range of financial services.
As of the moment, credit unions are gaining momentum with its customers, but for those who want to gain clarity on everything about credit unions, read on.
- Credit unions are not affiliated with labor unions contrary to the belief of many. They do not have anything to do with credit reports and scores.
- Joining is a lot easier than many people think. It is a lot simpler to qualify at present than it was a couple of years ago. Joining simply means opening an account while requiring a deposit, which is normally just a small amount.
- They offer superior service and satisfaction. The structure of credit unions is designed with lower and fewer fees, which is why they have defeated banks year after year in the American Customer Satisfaction Index. They are also able to provide superior service in each and every area.
- Fees are more affordable and acceptable. Compared to traditional banks, credit unions offer more affordable and acceptable fees, which is why more and more people are turning to them. In the country, 72 percent of the biggest credit unions offer free checking accounts. And even when consumers get hit with a fee, it is still significantly lower compared to that of the banks.
- There are plenty of ATMs. Most credit unions are part of large ATM alliances that allow their consumers to use teller machines for free, even at far places. Consumers also get reimbursed when they get charged for an ATM fee.
Branches are also available. Credit unions are now allowing their members to use branches from different credit unions.
- Loan rates are a lot lower. One of the best reasons why people should prefer credit unions is the fact that loan rates are significantly lower, especially for auto loans.
- They offer higher saving rates. Members of credit unions get marginally better rates when it comes to savings.
- Credit cards are more favorable. Credit unions charge lower fees for those who carry a balance on their credit card. A regular credit card is usually one percent lower.
- They are using competitive technology. Many credit unions are now taking advantage of technology just like any other banks, so there isn’t much of a difference.