Forum Post: are Credit unions better than banks like Chase?
Posted 13 years ago on Oct. 11, 2011, 10:12 a.m. EST by xposingfalsehoods
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Im very ignorant when it comes to certain aspects of banking. I was told is better to take my money out of one of the larger banks and place them in a credit union bank. is this a wise decision? does anyone knows the benefits? or are they all the same crooks?
Don't know how it works there, but up here, as a member of a credit union you are actually part owner and get to vote on who runs the organization. Also, profits from the operation are distributed to the owners (depositors) in the forms of credits to you account(s) based on the amount in there. Credit unions are beholden to shareholders, but the shareholders are the clients - that's you!
OK from what I understand, and some of this comes from someone who is on the board of a credit union.
Most banks, when you take out a loan, use the repayments to pay their board members. When you open an account with them, though they are responsible for holding your money, will actually use the money you have in your account to use on the stock market. From this they also derive most of their profits, and only give you a small percentage back as "interest".
Credit unions work differently, most board members of a credit union are unpaid. They make no money from the union it's self. When you take out a loan from a union, the repayments go to paying wages, then to helping out the local community by offering lower interest rates on loans. As to accounts, I am not 100% sure, but I suspect that even though they do speculate on the markets, because they do not have to pay massive bonuses to board members or stock holders, the profits they make go into giving you a higher interest rate on your savings, and to helping loan rates low.