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Overcome the Most Common Objections to Joining a Credit Union

By Gayatri Jayal

Some individuals overlook the possibility of joining a credit union because of common misperceptions about credit unions. In order to clear up your doubts about credit unions, and show you the enormous benefits that a credit union membership can provide, here are some of the myths that you might have heard about credit unions and the truth behind them.

The first and most common myth about credit unions is that their field of membership is limited only to a certain group, such as an employer. While historically this has been the case, these days there are many credit unions with fields of membership that are much more open and inclusive. You are almost certain to find a credit union that you can belong to based on where you live, work, volunteer, attend church, or based on which credit union your family belongs to.

Another common myth is that a credit union has no advantages over banks or other financial institutions. This is not the case. Credit unions differ from banks in that they are not-for-profit. Whereas banks exist to generate profits and then to give these profits to their shareholders, credit unions are owned by each member.

Each member of a credit union is an equal owner of a part of the credit union, regardless of the amount of money they have deposited. Further, each member has an equal vote in deciding who should be on the Board of Directors of their credit union, and all the Directors are unpaid volunteers and fellow members in the credit union. Thus, the credit union structure is such that all members have an equal say in the administrative issues of their financial institution and it guarantees that decisions are made such that you, the member, benefits.

The third common myth about credit unions is that they are not insured. This is untrue, as all federal credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF), which is operated by the National Credit Union Administration (NCUA). In the rare instance that a federal credit union may fail, the NCUSIF ensures that the members of the credit union don't suffer any losses. According to the NCUA, no member of a federal credit union has ever lost money insured by the NCUSIF.

When joining a credit union, make sure that it is a federal or state-chartered credit union. If it is, you need not be worried about losing any of your money. You can visit http://www.ncua.gov/  or http://www.nascus.org/ for a list of insured credit unions close to you.

Another misconception is that credit unions charge a membership fee when you first join. Again, this is untrue. While credit unions generally ask you to keep a minimum of $5 (the amount can vary by credit union) in your account, this is your money and you can withdraw this amount and close your account at any time you wish.

A final myth is that keeping an account with a credit union is inconvenient. It is true that credit unions often do not have as many branches as the big national banks.  However, many credit unions are part of a network that allows their ATM or debit cards to be used at machines located across the country at no extra cost to their members. This means that you can access your funds wherever you are for no extra charge. What's more, some credit unions have a "shared-branching" partnership with other credit unions, a partnership which allows you to visit the partner credit unions for any transactions or services that you require.The partner credit union will assist you in the same manner as your own credit union would. Thus the coverage area of a credit union is oftentimes much larger than you might have thought.

Visit a credit union close to you today to learn more about your eligibility and the advantages of opening an account with them.

Published 07/13/2015

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