Most people don’t really give much thought to credit unions. Some may ask how they differ from traditional banks such as Citi, Wells Fargo, or Chase. Credit unions are different from traditional banks in that they are not-for-profit organizations and their board consists of elected volunteers, which are also members. Money that is invested is loaned out, at interest, to other credit union members.
Credit unions are geared to attract certain clientele. Membership is based on geographic location, occupation, etc. Because credit unions are nonprofit organizations, they are able to offer higher interest rate returns to its members on their savings or checking accounts. They are also able to offer business or home loans to members who wouldn’t normally qualify at a traditional bank.
Is your money safe in a credit union? Yes, credit unions are insured by The National Credit Union Administration (NCUA). The NCUA is an independent federal agency that charters and supervises federal credit unions. Look for the official NCUA blue-and-white sign to find out if your credit union is insured.
Credit unions are all about its members, and offer better rates and lower fees. Traditional banks offer the same services but usually at a fee. Traditional banks have shareholders they must appease as to where credit unions’ shareholders are its members.
In today’s economy, people are losing their jobs and a lot of what they worked hard for. They do not want to worry about bank fees. Credit unions usually offer free checking and/or savings accounts. They also provide the same services such as direct deposit, electronic banking, ATMs, overdraft protection, and loans.
When investing with anyone, there is always a risk, but you can assure that investing with a credit union is a safe and smart choice.
Contact Us
To find out about investments and other financial services, contact VFCU at their Brownsville credit union branch at (956)546-3108, or their Harlingen credit union branch at (956)425-5668.
FAQs
Credit unions are all about its members, and offer better rates and lower fees. Traditional banks offer the same services but usually at a fee. Traditional banks have shareholders they must appease as to where credit unions' shareholders are its members.
Are credit union shares a good investment? ›
Unlike traditional deposits, these shares offer the potential for an appealing rate of return within a diversified portfolio. Please note that returns are not guaranteed, and these funds do not qualify for deposit insurance through the Financial Services Regulatory Authority.
Do credit unions make risky investments? ›
Since credit unions don't have shareholders to appease, their primary objective is to offer the best financial services to their members at the lowest possible cost. As a result, credit unions are less likely to take on risky investments that could jeopardize their financial security.
Can I buy stocks through my credit union? ›
BestVest Online is your credit union discount brokerage account where you can buy stocks, bonds, options, and mutual funds using funds in your Visions account. Sale proceeds are also deposited into your account and available for immediate use on settlement date.
Is there a downside to a credit union? ›
Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.
Should I keep all my money in a credit union? ›
Your money is safer in a Credit Unions hands because all accounts are federally insured up to $250,000 and backed by the U.S. government.
Do credit unions pay dividends? ›
When you belong to a credit union, you're a member and a part-owner of the credit union itself. If you have an account at a bank, that's not the case. You're a customer. Banks pay interest while credit unions pay dividends, which are the credit union's way of sharing their profits with members.
Why put your money in a credit union? ›
Credit unions operate to promote the well-being of their members. Profits made by credit unions are returned back to members in the form of reduced fees, higher savings rates and lower loan rates.
What are the 5 benefits of a credit union? ›
- Credit Union Benefits.
- Better Rates on Savings Products.
- Lower Rates on Borrowing Products.
- Lower Fees.
- Member-Owned Financial Services.
- Up to $250,000 Insured.
- Perks and Free Education.
- FAQs.
FDIC. Both the NCUA and FDIC are responsible for insuring funds in the event that a financial institution fails. The NCUA insures credit union accounts, while the FDIC provides insurance for bank accounts. They both come with the same limits on insurance coverage.
Credit unions and banks are both insured, with most banks being insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per customer. Most credit unions are similarly insured by the National Credit Union Administration (NCUA) for up to $250,000.
What is the biggest risk to credit unions? ›
Liquidity Risk: The risk of not having sufficient liquid assets to meet the credit union's short-term obligations, which could impact its ability to function effectively and serve its members. Interest Rate Risk: Credit unions often have a significant portion of their assets and liabilities tied to interest rates.
Can you take money out of your shares in the credit union? ›
Members can withdraw shares at any point, provided they are not pledged as security for a loan.
Can I cash in credit union shares? ›
Common Shares are an investment in your credit union. They can be redeemed in the event that you move out of the Vision trading area or upon death, but they're best suited for long-term investing. With the cash payout occurring annually, you'll reap the financial rewards of your credit union membership every year.
What can credit unions invest in? ›
A Federal credit union may invest in a fixed or variable rate collateralized mortgage obligation/real estate mortgage investment conduit.
Is it better to save money in a bank or credit union? ›
Lower fees: Because credit unions are not-for-profit, they typically charge lower fees than banks. Higher savings rates: On average, you'll find better interest rates at credit unions than banks, though some high-yield accounts at banks rank at the top of the industry.
Is my money more safe in a credit union? ›
Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.
Is it worth switching to credit union? ›
Many offer free accounts and fee waivers, and credit unions are known for charging lower interest rates on loans than a lot of banks. Higher yields on deposit accounts. In addition to using profits to lower fees, credit unions typically offer more competitive rates on deposit accounts than many banks. Member benefits.
Do credit unions pay higher CD rates than banks? ›
Key Takeaways
Credit union and bank CDs may be insured for up to $250,000 in the event of financial institution failure. Credit union CDs may be called share certificates, and they may pay higher dividends (interest) on average compared to commercial bank CDs.
