Key takeaways
- We share all kinds of things with each other: rides, vacation rentals, apartments, clothing, streaming services, etc.
- If you’re into the sharing trend, you might consider how credit unions share their profits with you by paying higher interest on deposits and charging lower interest for loans.
- Credit unions are not-for-profit institutions, so account holders are actually members and, further, the members are essentially owners.
- Becoming a member of a credit union can give you a little more money in your pocket that you can use to pay off debt and start saving.
Today, more than ever, we are really sharing with each other. We share rides, Airbnb, apartments, clothing, various services, and probably many other things. If you take this sharing theme a little further, you’ll find there’s a certain type of sharing that occurs in the marketplace involving money.
No, I’m not suggesting you share your money like you share your streaming services and other things. What I’m getting at is that you can actually put your money on deposit or borrow money from several different kinds of institutions. Most of you know that you can do that with big banks.
You may or may not be aware of smaller community, or local, banks you can use. But there’s a third category you may not know about and that’s the one that really shares with account holders: credit unions. Credit unions are not-for-profit entities. Account holders, called members in this instance, actually own the credit union, so those depositing their money and taking out loans are essentially member owners.
Since credit unions are not-for-profit, you’ll get better deals from them. What do I mean by “better deals”? The first way is that you’ll typically earn more interest on money you deposit there. Remember, those profits don’t go to someone outside of the institution, they stay with the members. Now that’s a good deal. Second, when you take out a loan from a credit union, you’ll typically get a more favorable interest rate.
There’s a massive amount of debt in our economy and a lot of it is incurred by the younger generation. They’re floating debt and student loans as they come out of school. Close to 40% of these loans have variable interest rates that float up and down. Wouldn’t it be nice to go to a credit union and lock in a lower rate when you borrow? That way, you know exactly what your expenses are.
If you’re currently using an online-only bank, many of which are opening up on the internet, and want to start dealing with a bank that has a physical location, a credit union is a great alternative. You’ll get a little more interest for your money. That’s great because it helps you keep more money in your pocket to, hopefully, pay off any loans more quickly by getting better rates on those loans. Paying less interest makes it a little easier.
If you’re really participating in this sharing economy, credit unions make a lot of sense. A credit union provides a place where you can share and get some real benefits for doing it. Take that into consideration the next time you look at your banking relationships and determine how you’d like to do that. Until next time, enjoy.
Gary