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It’s no secret among credit union members why they choose to bank there. Lower loan rates and fees, higher dividends and member-focused service are just a few of the benefits credit unions offer. But sadly, a majority of Americans still don’t know what a credit union is or how to join one. That’s why it’s so important to teach your kids early about the benefits of credit unions.
SCE FCU’s nonprofit organization, the Center for Financial Empowerment, makes sure teens understand the “credit union difference” and it’s a core component of every class we teach. We’re trying to turn the tide of statistics like these:
- 40% of people who aren’t already part of a credit union think they can’t join one
- 64% are unfamiliar with what credit unions are
- 71% of millennials have never heard of credit unions
- 16% of Americans use a credit union as their primary financial institution
Even among people that know something about credit unions, there’s a lot of misinformation out there:
- 64% of Americans don’t know credit unions are not-for-profit
- 3 in 10 Americans say it’s difficult to find a credit union they can join
- 45% believe credit unions don’t offer the same products and services banks do
- 38% believe credit unions don’t have enough branches and ATMs
- 3 out of 5 Americans think credit unions don’t offer mortgages
- 55% (over half) believe credit unions don’t offer mobile or online banking
Now’s a great time to set the record straight and teach the next generation the reasons credit unions are a great option for banking.
To start, there’s a foundational difference between credit unions and banks: Credit Unions are not-for-profit cooperatives, while banks are in business to make a profit for their shareholders. Why is this important? Because when a credit union makes a profit, it goes back to their members in the form of lower loan rates, low (or no) fees, and higher interest dividends on savings. Bank profits go to their shareholders, not their customers.
Credit unions require membership through a common bond and a small amount of “shares” kept on deposit. The “common bond” requirement is usually very inclusive, such as people living in a geographic area, an occupational group (such as teachers, steel workers or law enforcement), or a large employer. Family members of current credit union members are also able to join, so belonging to a credit union is easier than you might think.
Unlike banks, credit unions don’t have paid Boards of Directors or wealthy shareholders to pay. Credit union customers – called Members – are all co-owners of the company. Members elect representatives to serve on a Board of Directors as unpaid volunteers, providing oversight and governance of the organization.
Credit unions offer the same products and services you can find at a bank:
- Savings and checking accounts
- Credit cards
Investment, insurance and business services are also offered through strong partner networks. Credit unions offer lots of convenience through a nationwide network of shared branch locations and ATMs, as well as competitive online banking and mobile banking services. Most people are surprised when they find out just how convenient it is to bank with a credit union!
Probably the best part about credit unions is they’re able to provide “big bank” service with a “small town” feel. Credit unions treat you like an individual, not just a number, and many members say they like the family feeling they get from their credit union.
Of course, the best way for a child to learn about credit unions is to become a member of one. SCE Credit Union offers free Youth Savings Account for kids of any age, and free Teen Checking starting at age 15. Contact us to open an account and help your child learn the credit union difference.
Help us empower the next generation for financial success!
The Center for Financial Empowerment is a 501c3 nonprofit organization whose mission is to empower disadvantaged youth through financial literacy education. Find out more about our work at Center4FE.org.
Affinity FCU/Harris Poll, 2019
Credit Union National Association, 2019 National Awareness Survey
Choosing A Financial Institution, Take Charge Today, August 2013