The credit union

When selecting a financial institution, many people overlook the credit union, best known in the US as credit unions, not to mention that these institutions may prove to be a more convenient alternative. However, due to increased costs of banking services, unions have gradually been gaining ground and popularity.

These institutions began to appear in Germany in the mid-nineteenth century and emerged as credit societies to provide loans to workers and small traders who before the restrictive conditions of banks, fell victim to usury. Thus, the model spread throughout Europe where they were known as the “people’s bank” in some parts, until the first cooperative established in the United States in 1909 in Manchester, New Hampshire.

Cooperatives are non-profit institutions, unlike banks seeking to generate revenue.

In addition, by the fact that non-profit institutions obtain tax advantages, which in turn allows them to offer better rates to its member customers. Likewise, profits are distributed to its members through lower loan rates, higher dividends on savings, and lower costs of services.

All members have an equal share regardless of the amount of money they have in deposits, which means that each member has one vote. The institution is under the direction of a board of directors which is elected by the members.

If you are interested in being a member of a cooperative, you have to meet certain requirements, since members must share a common bond that can be workplace, geographical area in which people live, affiliation, or social grouping.

Cooperatives also require an initial deposit to buy a stake in the institution and open an account which on average is $ 20. But it is important to note that the requirements depend on each cooperative.

Something very important is that cooperatives are regulated by the National Administration of credit union (NCUA), and every account is insured up for $ 250,000.

• Aside from offering lower service costs and more attractive interest rates, the cooperatives to be smaller usually have a more personalized service.

• One of the factors that people take into consideration when opening a bank account is to have a wide network of agencies to make their transactions, and therefore prefers the big banks. But unions have a network of service centers you can make transactions like your own cooperative. There are more than 4,500 cooperatives in this network.

• In general, credit unions offer the same products and services as banks, but the range of products varies between institutions, as some do not can afford to offer all products to be smaller and have a turnover lower.

• Many unions offer financial education services to its members that allows them to put their finances in order and take advantage of a more effective maner products offered by the institution.

If you are interested seek a cooperative in your area you can make it through the NCUA locator.