Credit Unions

Credit unions are different from banks because they are non-profit, and they are owned by their members. This means that any profits that the credit union makes are given back to members through higher deposit interest rates and lower loan rates. The Economic Stabilization Act of 2008 guarantees that all deposits in community credit unions are guaranteed up to $250,000, so deposits are very safe. More than 90 million Americans belong to credit unions, with 10 million of them living in California or Nevada. Many people are eligible to join credit unions based on their employment, the community where they live, or based on other associations.

Credit unions really do have lower interest rates on loans, mortgages, reverse equity mortgages, and credit cards. One credit union is currently offering Visa credit cards for those with A plus credit at only a 9.90 percent interest rate for up to $20,000. The interest rate for B rated credit is 11.90 for up to $15,000, and C credit ratings pay an interest rate fo 13.90 for up to $10,000 of charges. They are also often lower on their interest rates for first mortgages as well. This same credit union offers a 5.25 percent interest rate for those with 20 percent down on their house purchase for a 15 year loan. For a 30 year loan, the interest rate is 5.75 percent.

Community Credit UnionCredit unions often give customers who have direct deposit special interest rates. For example, a car loan interest rate for a new car for those with direct deposit who have excellent credit scores is only 4.75 percent. Individuals with good or fair credit pay from 5.25 percent to 8.50 percent interest rate. This credit union even offers second chance car financing at 8.50 to 9.00 percent for bad credit. These rates are far lower than those that banks or loan companies offer on car loans.

Personal loans with maximum limits up to $20,000 for excellent credit begin at only 7.00 percent. Good credit customers can get a long term consumer loan for up to $12,500 at only 9.00 percent interest rate, and bad credit customers can get $5,000 with a 14.00 percent interest on their loan. This is a prime example of how credit unions channel their profits back to their customers through their low interest rates on loans.

Interest on savings accounts and other types of accounts is very low, even at a credit union. For instance, the interest rate on a regular savings account is around 0.10 percent. Credit unions also usually carry money market accounts, and they are paying monthly with a dividend rate of 0.15 percent. Traditional IRAs are around 0.25 percent interest rate, and they are paid monthly.

Credit unions focus on providing services to their customers rather than on making profits since they are a nonprofit organization. Members elect a board of representatives to run the credit union on their behalf.

Many credit unions are based on employment. There are police credit unions, teacher credit unions, and many more. Many of the credit unions that once focused on certain populations have opened their doors to include all of those in a community who would like to join the credit union.

Credit unions often give back to communities by sponsoring events, such as community clean up days. They are often familiar with their members and try to provide extra service that an individual would not find at a bank. One of the most popular services that credit unions offer is checking accounts that also provide debit cards for members. Because most credit unions do not have their own ATMs, they provide their members with the use of other ATMs in the community and across the United States.