A community credit union is a not for profit banking facility that can be joined by people who live within a defined community. Most often, that community is defined by geography. A person might be able to join the credit union if he lives in one of the locations where it operates. Some of these alternative banking facilities operate in numerous cities, counties, or states, and others serve only a few select cities. These credit unions can also be defined by a commitment to invest in the communities where people can join.
There are many different types of credit unions. Among the most popular kinds are Select Employee Group (SEG) credit unions. These are only open to people or their family members who belong to certain professions or unions. Sometimes, membership in a particular club allows people to join some unions, or alternately, there are student and religious affiliated credit unions.
All of these credit unions and the community credit union share some common factors. These businesses are owned by their members, and any profits they make are funneled back into programs for members. For example, a credit union may be able to offer better interest rates on loans than those offered by banks. Most credit unions also feature federal insurance on deposits and savings.
One advantage of the community credit union model is that it is accessible by many more potential members. SEGs and other credit unions are attractive, but their membership is limited. It is easier to be part of a community than it is to qualify by profession, club, education or religious affiliation. Due to the growth of these financial institutions and their popularity, about 25% or more of the credit unions today are now community based.
The type of programs available at any individual community credit union may vary as to the size and scope of membership. At minimum, these businesses offer things like checking and savings, and they may offer small personal loans, credit cards, or auto loans. Much larger credit unions can have IRA investment accounts, and might offer larger loans for business expansion or home purchase. The more the credit union grows through member investment, the more it may be able to diversify its financial programs, which benefits members.
Most community credit unions are excellent places to bank, and the return in less expensive services is desirable. It’s worth noting that people who use banks or savings and loans are customers, but members of a credit union are partially owners. Still, some credit unions get established and remain very small, and they may not be able to provide some of the conveniences banking customers want, like online banking. Before becoming a member, consumers should also verify that deposits are insured and that the community credit union has a good reputation.