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Credit unions are member-owned financial cooperatives that provide savings, credit and other financial services to their members. Credit unions pool their members' savings, deposits and shares to finance their own loan portfolios rather than rely on outside capital. Members benefit from higher returns on savings, lower rates on loans and fewer fees, on average. Still a little confused? Watch the video!
The Difference Between Banks and Credit Unions – Part 1 by Larissa Walkiw
Credit unions worldwide offer members from all walks of life much more than financial services. They provide members the chance to own their own financial institution and help them create opportunities such as starting small businesses, growing farms, building family homes and educating their children. Each member may run for the board of directors and cast a vote in elections.
Credit unions are known for member service and compassion. Individual credit unions are part of a national system of credit unions that share a common philosophy of member ownership. The Credit Union National Association is an organization dedicated to helping Americans understand the value of credit unions.
Community building and helping people are two of the guiding principles that make credit unions unique. Credit unions help build lives, not just bank accounts. This commitment goes beyond simply investing dollars. In addition to donations and sponsorships, credit unions support charitable organizations, service clubs and community groups through employee fundraising and volunteerism.
It’s your $50,000
The potential benefits of credit union membership for young people
Research by the Center for Financial Services Innovation found that 18‑to-24 year olds are far more likely to be among the "unbanked" and "underbanked" than consumers in older age cohorts. Far higher percentages of this youngest adult age cohort use grocery stores and big box stores to cash their checks and report that they find dealing with "banks" (meaning formal depository institutions) "not at all pleasant."
You've likely heard the common comparison of career earnings differential for those who stay in school to complete college versus dropping out of high school or ceasing formal education after high school. Census data shows that a high school graduate can expect to earn approximately $820,000 over his or her lifetime, while a bachelor's degree graduate can expect to earn approximately $1.4 million and a graduate with a Master's degree approximately $1.6 million.
What, in a similar fashion, would be the expected lifetime savings of a young person who conducted a lifetime of financial transactions with a credit union compared to the same set of transactions not using a credit union?
To estimate an answer to this question, we referred to data from the US Federal Reserve Survey of Consumer Finances, 2009 to construct a 50-year "financial lifetime" based on survey results showing average balances for various categories of deposits and loans for households of various ages.
Doing business with a credit union is equivalent to picking a winning lottery ticket with a lifetime payout of nearly $50,000
Applying a typical credit union rate differential to the annual balances, the total lifetime savings that a typical consumer could accrue through a 50-year lifetime of doing business with a credit union compared to doing business with other financial institutions or alternatives would amount to $46,984. In short, doing business with a credit union is equivalent to picking a winning lottery ticket with a lifetime payout of nearly $50,000.
See appendix of the Federal Reserve Survey for a list of balances by age.
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“Being young means having a lot of time to grow. As young adults, we’re growing every day and we’re presented with tons of opportunities, becoming who ever we choose to be! Now is the time to understand finance and banking, giving us a head start in our future financial lives. Here, you’re going to find a lot of different blogs, covering things as enjoyable as music and other things as serious as paying for college, but all of this is meant to help you. We’ll cover different ideas, ways of saving money, recent happenings and local events. Feel free to comment, ask questions and interact! I’d love to hear from you.”
– Vicky Goldwater, Young & Free Michigan Spokester