Did you know that there aren’t just benefits of a credit union membership for you? That’s right, there are many benefits of having a credit union in your community, for your community.
Playing an active role in and giving back to their communities is central to the mission and core values of most credit unions. And credit unions don’t just talk the talk, they walk the walk.
In this post, we’ll explore this a bit so you can see just how valuable your hometown credit union is! We’ll tackle big questions like:
- What are the benefits of joining a credit union?
- Are credit unions not for profit businesses?
- How do credit unions help their communities thrive?
Understanding Credit Unions
A credit union is a nonprofit financial institution that’s cooperatively owned and operated by its members. Similar to banks, credit unions are professionally managed and subject to federal and state regulation.
Credit unions offer many of the same services as banks, such as savings and checking accounts, loans, and credit cards. However, credit unions differ from banks in several important ways.
Credit Unions vs Regular Banks
- Credit unions are not-for-profit, whereas banks are for-profit entities.
- Members of credit unions are also owners, with each member having a say in how the credit union is run.
- To join a credit union, you have to meet certain eligibility criteria (like living in a designated area or having a particular occupation) whereas banks accept all kinds of customers.
- The National Credit Union Administration (NCUA) insures the deposits at credit unions while the FDIC insures the savings at a bank.
- Credit unions typically offer lower interest rates on loans and higher interest rates on savings accounts (and other more favorable terms and perks!) than traditional banks.
- Generally speaking, credit unions are known for having better customer service and garnering high levels of trust among members.
- Credit unions often have a focus on serving their local communities and supporting local businesses.
Because credit unions are member-run nonprofits, they have a unique focus on community and prioritize involvement and support. Driven by a commitment to serve the needs of their members, employees, and communities, credit unions commonly partner with local organizations and businesses to promote economic growth and development in their communities.
This local focus is one of the biggest things to set credit unions apart from conventional banks.
Economic Impact of Credit Unions in Communities
Credit unions help shape and power local communities. Their imprint on the area economy can be seen in both direct and indirect ways. Here are just some of the possible paths a credit union might take to engage with its community’s fiscal outlook.
Job Creation & Local Employment
Credit unions usually hire locally. By doing so, they create jobs and support the local economy. Moreover, credit unions also provide training and development opportunities for their employees, which can lead to career advancement and better-paying jobs.
Business Loans & Support for Small/Local Businesses
Credit unions provide business loans which provide support for local businesses and help the economy, which is critical for the growth of the community. It’s often easier for small businesses to access capital through credit unions than traditional banks. Additionally, credit unions provide business-oriented financial education and support for entrepreneurs, helping them to start and grow their businesses.
Keeping Money Local
Unlike big banks, the money deposited in a credit union tends to stay in the community rather than being distributed or invested elsewhere.
Investing in Local Projects & Infrastructure
Credit unions often partner with local organizations and businesses to fund initiatives such as affordable housing, community centers, and public transportation. These projects not only create jobs but also improve the quality of life for the community.
Offering Financial Education
Many credit unions provide financial education to their members, which can help people develop important money management skills, such as budgeting and saving. This can in turn help people become more financially stable, which can benefit the local economy overall.
Supporting Civic Organizations
Credit unions often support local non-profit groups and community events through sponsorships and other types of financial support. This can help strengthen the social fabric of the community and contribute to its overall well-being.
Supporting Underserved Communities
Credit unions are more than just financial institutions; they’re often lifelines for underserved communities. These communities are typically low-income areas where residents have limited access to mainstream marketplaces and services.
Because credit unions are willing to grow roots, they can help these struggling communities to establish wealth and achieve financial stability. Through their commitment to financial education, affordable lending, community partnerships, and other programs and initiatives, credit unions are helping to build stronger, more resilient communities for all.
Here are some of the ways credit unions contribute to the welfare of underserved communities.
Providing Access to Financial Products & Services
Many underserved communities lack access to traditional banking services, such as checking accounts, savings accounts, and loans. Credit unions provide these services to their members, typically with more favorable terms than traditional banks. For example, credit unions may offer lower fees and more flexible lending requirements.
Offering Financial Literacy Resources & Counseling
Credit unions often provide financial education and counseling to their members. Many have workshops — on topics like budgeting, saving, and credit management — to help members to develop the skills they need to achieve financial security. Credit unions may also offer one-on-one counseling sessions, working with members to create personalized financial plans.
Volunteering & Giving Back to the Community
Credit unions seek to improve the lives of local residents via employee volunteer days, charitable campaigns, and in-kind or monetary donations to local nonprofits. By doing so, credit unions aspire to strengthen the bond with their members and attract new members who also value social responsibility and community engagement.
Facilitating Homeownership & Small Business Ownership
Credit unions aren’t on the scene for their own self interests or for short-term gains. They understand that communities need dependable, active stakeholders who are invested in the long-term success of the community.
Credit unions know that increased homeownership and small business ownership can have several benefits to the economic growth on a community. These include:
- Boosting property values. When more people own homes in a neighborhood, it can raise property values. Higher property values can make it easier for people to sell their homes or refinance their mortgages, which can free up money that can be spent on other goods and services.
- Increasing tax revenue. The more people who own homes and small businesses in a community, the greater the tax base, which helps support local infrastructure and services such as schools, parks, and public safety.
- Stimulating new businesses. Small businesses are a major source of job creation and service provision in many communities. With increased access to start-up funds and operating capital, more ventures can take off and stay aloft.
- Encouraging local spending. Homeowners and small business owners are more likely to spend money locally. This is because they have a vested interest in the success of their community and are more likely to support local businesses.
In turn, a community with a solid financial foundation tends to be more resilient and better able to accommodate its residents and visitors. The increased prosperity translates to a higher standard of living.
Here are just a handful of ways a credit union might fuel home and business ownership.
Supporting First-Time Homebuyers
Credit unions may offer specialized programs for first-time homebuyers, such as down payment or closing costs assistance. Such aid can help make buying a home a more attainable reality for more people.
Offering Affordable Mortgages
Credit unions tend to offer more desirable or lenient mortgage options, including fixed-rate mortgages and low down payment options, than traditional banks. This can make homeownership more accessible to a broader array of people.
Giving Microloans & Small Business Support
Credit unions often provide services that help small business owners to access the capital they need to start or grow their businesses. Credit unions may also provide business counseling and financial education to help owners develop successful business plans.
Investing in the Community
Because credit unions are also local businesses, they may prioritize contributing resources to the community in a variety of ways. This can help deepen their connection with their members and their families and help forge new alliances between other businesses and organizations.
Valley Credit Union Benefits of Membership: The Ripple Effect
Why ally yourself with VCU? One important reason: We’re firm believers in serving our communities. When you become a member, you’ll quickly see there are so many benefits of a credit union — for yourself and your surrounding community.
By joining Valley Credit Union, you not only gain access to financial services and benefits, but you also support your local economy and community. Click, call, or come in today to learn more.
About the Author
Pat Force, President and CEO
Pat Force has been President and CEO of Valley Credit Union since 2016. He has worked in banking for over 30 years and has an MBA. Pat is passionate about credit unions and their “people helping people” philosophy. He enjoys collaborating with others to arrive at a result that works for the common good. Away from the office, Pat likes to spend time with family, travel, read and go for a nice, long hike.