Many people who visit Resource One Credit Union have questions about what a credit union is and how it compares to private banks. Although the differences are substantial, they’re easy to understand, and it’s just as easy to bank with a credit union as it is to work with any private bank. Despite some similarities in performance, credit union memberships have benefits that are unique compared to those offered to account holders at private banks.
In this guide, we discuss the unique benefits of credit unions, who can become a member, and how these organizations are structured. This guide applies to Resource One Credit Union near Dallas, TX and some other credit unions that you may encounter, including those that are based on military affiliation.
Understanding the Difference: Credit Union vs Bank
The most significant difference between a credit union and a bank is the way that each organization operates. Unlike banks, which are owned by private shareholders and provide a service to the public at large, credit unions are owned by the members who use the credit union’s service. While there is a membership fee that is generally equivalent to the account fees that private banks charge, there is a fundamental difference in the philosophy of how a credit union functions.
Because each member is a part-owner of the credit union, the organization’s managers are held accountable to individual account holders. This accountability results in transparency that you cannot find at private banks. When you’re charged fees, you know exactly which features or changes they’re going to support. As you track how the credit union applies those funds, you can clearly see that the ones who benefit are the members—you and the community around you.
Beyond structure, there are several other small differences. For example, terminology can differ between credit unions and private banks even though a share draft account and share account operate similarly to a traditional checking account and savings account.
Despite the big difference in philosophy and small differences in terms and terminology, customers who have only banked at private banking institutions in the past generally won’t face any significant confusion when making the transition to a credit union.
How to Join a Credit Union – Common Membership Requirements
Unlike private banks, there are often firm restrictions on who can become a member of a credit union. These restrictions form the identity of the credit union and ensure that the organization remains focused on its core ideals. There are many ways that a credit union can determine its membership requirements, but here are a few of the most common qualifications:
- Location – Local credit unions base membership on geographic proximity. This requirement highlights the difference between an international banking organization and a credit union established to support the neighborhood around it. The former sees the local branch as one of many locations which must generate a profit for the corporation while the latter often becomes an integral part of the community and expends its energy giving back to the people who live there.
- Occupation – These credit unions exist to serve members of specific professions such as teachers, police, and firefighters. Under their exclusivity, these organizations can often better serve a particular profession’s needs and offer credit union services that are relevant to them, including short-term loans and unique investment opportunities.
- Military Experience – The Army, Navy, and Air Force each have credit unions comprised of current and former service members. These organizations are often open to the immediate family members of those who have served as well.
- Religious Affiliation – Another kind of community that may create its own credit union is religious groups. Minority religious communities may band together to support each other so that young people within the religion can receive access to low-interest loans and financial services that would otherwise not be available to someone with minimal credit history.
Generally, credit unions will include a reference to their membership type in their name. If you have any doubts, you can always visit a branch of the credit union and speak with a representative to find out if you are eligible to become a member.
How Resource One Credit Union Helps Its Members
At Resource One Credit Union near Houston, TX, we’re proud to help our members by offering exclusive benefits that go far beyond basic customer service. We cycle the profits from our lending operations right back into incentives that serve our members. The advantages that come with being a member include:
- Lower rates on loans, making us a contender to be the best credit union for car loans and mortgages.
- Minimal fees so that you can keep more of the money that you’ve earned.
- Educational initiatives to help our members understand how to make the most of their money.
- More flexible terms and requirements on loans, so those who would have had difficulty finding favorable loans from private banks can avoid predatory terms and high-APR loans.
- Higher return on the savings that you deposit with us.
There are many other benefits that come with being a member, so we encourage you to visit one of our locations near you to fully explore your options.
Join a Credit Union That Serves Your Interests Today
The best way to discover the differences between a private bank and a nonprofit credit union is to make the switch and join today. We’re proud to support every community that welcomes us, and we continuously offer new, exciting benefits for our existing members. When you join Resource One Credit Union, you’re helping the community around you, including families and small businesses that depend on access to the affordable financial products that we offer.