Is a Credit Union Right For You?

Thanks for spreading the good word about credit unions (CUs). I work for one (Group Health Credit Union in Seattle, WA), and I’m a firm believer that credit unions are an excellent alternative to banks, especially in such trying economic times. I’d like to add a few comments to your blog, if I may.

First, one of the reasons credit unions have money to lend is because the vast majority of CUs did not get involved in the subprime mortgage debacle. Most CUs are well-capitalized and open to lending, even as other major financial institutions are holding on to their cash in order to remain liquid.

Second, CUs are, by and large, perfectly equipped and happy to handle large loans, including mortgages. In fact, many borrowers are finding that credit unions are the place to go to refinance from an unmanageable ARM to a more reasonable mortgage.

Third, about the question of “limited membership”—credit unions all over the country have expanded their charters. For example, Group Health Credit Union is open to anyone who lives, works or worships in Washington State. While many CUs started as the financial institution for a group of employees, most are now community chartered, offering all the products and services of a bank.

Fourth, you are absolutely right that CUs provide excellent customer service. At Group Health Credit Union, our branch staff often recognize members and will call them by name. We, like most credit unions, go out of our way to help our members with their financial needs no matter how much time or extra effort it takes. Additionally, we offer free financial education seminars to help educate our members and the public about financial issues that concern them. And we offer other services that you may not find elsewhere.

Finally, one enormous distinction between credit unions and other financial institutions is that CUs are member owned. We do not have stockholders to whom we are obligated to make a high rate of return on their investments. We have members who are co-owners in a financial co-operative. This means that all members have a say in how the CU conducts its business, and we continue to invest carefully because we know that the money we invest belongs to our members.

This is all great info, especially these days! We must all do what we can to let people know that credit unions are here and still stable. With everything that’s been going so wrong in the economy, it’s nice to let people know someone is doing something right!

Credit unions have never asked for - or needed - a bailout and are not part of the current economic problem. Credit unions have always adhered to conservative lending practices, not the risky loan programs and subprime mess that everyone had heard so much about.

Also, many people don’t realize that the credit union deposits are federally insured to at least $250,000 by the NCUA (National Credit Union Association) just like the FDIC for banks. As not-for-profit cooperatives with their member-owners’ interests in mind, credit unions hold on to mortgage loans instead of selling them to a secondary market for a quick dollar. And unlike banks, credit unions are locally owned - members’ money stays local, and gets reinvested in the local community.

People should know that there are still some very sound and responsible financial institutions out there!

Great post and I agree with your post. I love my local credit union. Works for me. : )

Very glad to see you’re recommending people take a look at credit unions — but some of your info is incorrect. Nowadays, it’s NOT that rare to find a credit union that offers business accounts. And loan amounts are really not that small! My credit union offers home mortgages (including jumbo loans) and I know we have credit card limits up into the $20K+ area. Most credit unions offer auto loans — and a new car can definitely get pricey these days!

To me, though, if you’re trying to establish (or re-establish) your credit score, a credit union has a “secret weapon” — a SHARE SECURED LOAN. Most every credit union offers them (just Google it). A share-secured loan functions much like a secured credit card, but it will cost you a LOT less. I currently have a share-secured loan that Im paying a little over 3% on. Yes, THREE PERCENT INTEREST — with no up-front fees, etc. And it reports to the credit bureaus just like it was an auto loan. I’ve already seen my credit score jump up over 10 points in just a few months.

And — it’s really not THAT hard to join a credit union. It used to be that “you had to work for a certain place” like the phone company, or police dept, or a school. Nowadays, though, there are “community chartered” credit unions — that serve particular geographic areas. Oftentimes, if you just join a particular association, you’re eligible to join, too. (Think of a credit union like Costco or Sam’s Club — you pay a little, usually around $25, to join, one time - and you’re in for life.)

So, if you want to build good credit, check out your local credit union.