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Benefits of Using a Credit Union Posted on December 2, 2015

By Jerry Warner, EzineArticles.com

If you’ve been thinking of joining a credit union but aren’t exactly sure whether one is right for you, then the information below should help you to make your decision. In addition to a look at exactly what it is and how it operates, you’ll see some of the advantages of choosing to fill your banking needs with a credit union instead of a more traditional bank.

In order to present both sides of the issue, you will also find a listing of some of the reasons why you might choose to avoid a credit union and go with a local bank instead.

Qualifying for the Union

There are a number of different ways that you can qualify for a credit union, just as there are a number of different unions that you can qualify for. Since the union is an organization that allows its members to save their money together and lend to each other with reasonable interest rates, the union members themselves are the ones who determine exactly what the qualifications that must be met to join are. Often, you’ll have to be a member of a certain group or be able to meet certain criteria in order to apply for membership.

Services Offered

Once you find a credit union that you qualify for, it’s important to understand exactly what services are offered and how they differ from similar services offered by banks and other financial entities. The most common accounts offered by these unions are savings and chequeing accounts, and loans are often a large part of the union business as well. The savings balances are held in a common fund, and loans are financed by this fund. The interest that is paid on the loans is fed back into this savings fund, and the profit generated by this interest benefits the various members of the credit union.

Advantages and Disadvantages

Credit unions have a number of advantages, but they aren’t without their disadvantages as well. Being able to share a common savings fund and offer loans to other union members through it is a great way to help your fellow union members while still drawing a profit on your money, but depending upon the situation at the union all of your money might not be immediately accessible. Luckily, most countries have national backing for their credit unions and through that they are able to guarantee your investment even if the union that you belong to experiences problems. The largest problem that many people face in regards to joining a union is finding one which they qualify to join.

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