The benefits of a Credit union
Credit unions are a business that works by ownership of the members that deposit money. As a cooperative, they are a social organization, as a direct competitor to banks, for the interest of its members and for their benefits. Therefore, they also a good return in interest on the money deposited. As well as this I offer very good interest rates for loans. Because they loan to their members, and because their members hold a stake in the business, now more concerned when it comes to loaning money, and preferred to loan only when it is secured on property, and do not like to gamble like banks do, and this makes the credit union much more stable, and has very healthy books.
This also means that the credit union are usually quite happy to give you a loan as a mortgage, as the loan is guaranteed by the property, and he seldom affected by bankruptcies, or any other type of debt reduction schemes.
As the credit union is funded almost entirely from its members, and sometimes from the organization to which is joined to, this generally makes the business a very much a community growth scheme. The credit union is funded on principle, and does not have the complications of gambling with high-risk businesses, or stock markets. The credit union doesn’t like to take outside investments for the sake of expanding his business, as this is against the principal at which the business is built, or for the purpose it first came into being. The credit union has to be registered and is very much a commonplace institution, largely set in the community, and they can loan the members, in certain cases, unsecured loans if it is for small amounts, and if it has social benefits. You may be able to get a car loan from them, depending on what kind of credit union they are, and even if they are a local community members union loan you money to pay off a monthly bill to help you get back on your feet.
This is unlike a bank, who can make it very difficult for the individual to obtain credit, with very minor problems in their credit reports, but have no qualms in lending huge amounts of money’s to those businesses that have poor books, and to most people look as though they’re about to go bust, but the bank lends the money anyway, and compensates itself by charging higher interest on the multitude of lower borrowers and earners. This was the very reason that credit unions were first started, as lower earning people were very much low on the agenda for banks, and many people would save all their lives and if the time trying to borrow any funds the bank would often refuse, even though the great many depositing little, allows the bank to invest a great deal of money. It is on this principle that the credit union has the funds to make large loans, without outside help, because the members all invest little, and that little adds up to a great deal. It also works on the principle that token money is based on, and that’s you can lend a multiple of the amounts of money you have in reserve as long as there are no withdrawals that occur over the same time, often known as a run on the bank.
Credit unions are however required to have a reserve of at least 10%. However this is not always the case, and frequently the credit union holds less than this, and this is not usually a problem except for the smaller credit unions, and it is frequently the reason that credit unions merge with other cooperatives in the financial sector. As well as the members keep saving, there isn’t usually a problem, and the credit unions often encourage them and does encourage its members to save, even if they have been borrowing money.
Credit unions have become a necessary institution, as even with their competition with the banks, and other credit institutions, they have become lifesavers from the predatory nature, and antisocial practices of banks, building societies, and other credit institutions, who frequently put the needs of already wealthy businesses before the needs of the small guy, who have frequently contribute to the funds that they use to give to the former.
Consumer protection laws still apply to credit unions, and are a very affordable substitute for a payday loan, or other high interest loans, which amounts always properly regulated, and have been growing over the last few years in number. Credit unions can form up to 20% of the financial sector, which regarding the clientele base, is a considerable amount, as well as they exclude large businesses as they are against the principle in which a credit union has been set up.
So if you are looking for an alternative to credit cards, or even a new mortgage, why not try a credit union, that ethical, socially aware, and run by human beings, and not by the profits greed that accompanies the vast majority of other lending institutions.
