What is a credit union and are all credit unions associated with one another?
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It is like a bank, except owned by the members of the union. So you typically get some better interest rates and sometimes better benefits from it. They are independent of one another just like how Bank of America is separate from Wells Fargo.
A credit union is a financial institution that is owned by its members, members of a credit union are basically customers but their is a pretty important distinction, Often members vote annually to determine who is on the board of said credit union. Also in most cases you pledge say $5 that is your membership deposit that you cannot spend unless you leave.
Typically the credit union gets credit from its members in the form of deposits and loans the funds out to members only. Often they offer better interest rates both ways (lower to borrow and higher returns) as they technically want what is best for both sides of the transaction and have two reasons to lower overhead.
Banks are usually owned privately and lowering costs are solely a matter of competition and not shareholder preference.
Credit unions are like retail banks that are owned by their customers rather than being public companies with shareholders or privately owned company. Because they’re owned/managed by their customers, they tend to offer better rates (lower loan interest, higher savings account interest), more customer-friendly service, etc. because they’re not trying to maximize profits for an owner.
Because they are smaller/local, there are ways they associate to have access to platforms big banks can offer.
An important distinction is credit unions have a legal cap on the amount of commercial lending they are allowed to do effectively in exchange for the benefits they offer individuals over banks.
The answers provided are correct, but are missing the societal context of credit unions.
Credit unions are considered to be warming, friendlier institutions that are more genuinely focussed on their customers (who are also owners) than banks. They’re also smaller than banks, which has its benefits (more personal service) and drawbacks (fewer business banking services, in my experience).
While credit unions are generally independent, many do offer “shared branching” services, so as long as you’re a member of one, others will provide basic services. For example, if you’re a member of Washington County Credit Union, and you’re visiting Jefferson County, you can go to Jefferson County Credit Union and they’ll still be able to handle deposits and withdrawals for you.
You asked what a credit union is, but I will tell you why you should join one. I have been with my credit union for a little over 30 years. They have never charged me a fee for any service. Credit unions are not associated with all credit unions, but many of them share branches and have a network of ATMs from which you can get cash without a fee. I know that no longer seems very important, but sometimes you do still actually need cash. They often offer lower car loan rates so that you can pay off an existing car loan and save on interest.
I have never heard of a credit union cheating customers over and over again like Wells Fargo (although there must have been some who did on a small scale I never heard of). Finally, credit unions can be fairly localized, which means that while yours might not be the Bedford Falls Savings and Loan, it is not going to be an international mega-corporation.
Credit unions are owned by the members and are generally smaller organizations than banks, and as part owner their obligation is to you. This may mean reduced/nonexistant fees, better interest rates, more favorable loan terms, etc., all depending on your specific credit union.
Many people also believe that the smaller organization gives you more personal service that treats you more fairly than a large corporation would. This is especially true as many credit unions cater exclusively to certain populations such as (but not limited to):
* People living in one geographic area
* People who went to a particular college/university
* People who work for (or related to someone who works for) a certain company (this is how my credit union started)
* Armed forces, civilian contractors, veterans, or being related to someone who served
* Etc.
As far as if credit unions are associated with each other, many credit unions offer “shared locations” or ATMs that are “in network” meaning they don’t charge a fee. This allows them to have lower overhead costs while still being able to provide full services to their members as they travel or move. Your specific credit union should have information for which other credit unions they partner with for these services.
There are a few things that some people believe major banks do better, such as having the money to invest in better technology (such as phone applications and web interfaces) and internationalmoney transfers due to their scale, but for most people a credit union would serve all their needs
Credit unions aren’t as abusive to their customers as Wells Fargo, Citibank, and Chase and Bank of America area. Also, credit unions often pay higher interest rates but none pay worthy rates.
ATMs across all are often compatible. Some charge fees to use other’s ATMs, while others don’t. You can only deposit at your own bank or credit union unless they have agreements, which a few do, but most don’t.
If you don’t know what to use, try a credit union first, then see what a bank will do that they don’t, because it will be an equal or better experience with the credit union.
Most credit unions take new members, even if they aren’t the right type. In the long-ago, banks made it so credit unions had to have a small member base, like employees of marine companies or members of AARP, but now, just ask, and most will let you in or tell you some silly thing to do to get in, like sign up for a free temporary membership and you’re in forever.
Once-a-member-always-a-member.
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