What are Credit Unions and How they Operate?

Credit unions as a cooperative financial institution are growing further known as an option to high street banks and costly payday loans. This is because individuals utilizing credit unions are more in control of how it’s operated rather than leaving the decision to the shareholders.

There are numerous reasons why individuals would prefer utilizing credit unions over high street banks. Some of the main reasons are as follows:

  • Flexibility to save what you can afford any time you wish to
  • The willingness of credit unions to assist individuals with low income or those who have an inadequate credit history.
  • ability to provide an alternative to payday loans.
  • Difficulties opening a regular account with high street banks due to poor credit
  • Supporting a local operative that does not earn profit for shareholders

How does Credit Union operate?

Credit Unions operate differently as compared to high street banks since they are a financial cooperative. Below are some of the distinction of Credit Union from high street banks:

  • They are controlled by their members on behalf of their shareholders
  • Many smaller credit unions had their volunteers, while the larger units hire paid staff
  • Most credit unions handle their members’ money to cover the assistance they propose
  • Credit union members are compensated rather than rewarding outside shareholders

How to Join Credit Union?

Almost all local regions have a credit union, but you have to have a common bond before you can join or open an account with them. This means there are a set of qualifications before you can join. These factors are listed below:

  • you’re residing or working in the same location or area
  • you work for the same employer
  • you have to belong to the same trade union
  • either you belong to the same church or association

So as long as someone from your household shares a common bond with a credit union, then any member of your household can usually join.

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