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Top 4 Misconceptions About Credit Unions

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Credit unions are generally smaller and more local than banks. So, people tend to think they can’t provide as much variety in terms of technology and financial services. While some of this may have been true pre-internet, today’s market is different, and credit unions actually have more advantages than ever. Let’s take a closer look at some of the top misconceptions about credit unions.

But first... a quick history
Credit unions were formed in the mid-1800s at a time when it was not easy to get a bank loan. Back then, banks only approved loans if they were guaranteed to be paid back. This system was not ideal, especially for the farmers and local businesses of that time period. Take this as an example:

A drought ravages a local farmer's land, affecting his crops and livestock. His harvest is meager this year, and he can't sell enough crops and livestock for the season. The farm doesn't make any money. It also means that the supply of produce and beef is now low, and local stores can't stock their shelves.
At that time, many farmers and businesses were unable to get loans from banks to help them through hard times like these. Eventually, they went out of business. Because of this, credit unions were created by groups of people who put their own money together and lent it to others in their community. It was a way for people to make a better life for themselves and for their fellow neighbors.

Today, credit unions have grown to serve almost 127 million people in the US and offer many different types of banking services to their members. They have become popular for offering higher-paying interest rates on deposit accounts and low rates on loans. Now, with technology advances, credit unions can provide quick and secure access to your account and many other digital services.

Top 4 misconceptions about credit unions
There's a lot of information out there about credit unions that paints a picture of small institutions that can't keep up with the times. In reality, credit unions have come a long way in the last decade and offer competitive services. Here are some common misconceptions:

#1 - Limited branches
The argument goes something like this - "Credit unions are limited in the number of branches and have issues with offering access to ATMs."

Firstly, most credit unions have several branches and ATM locations in the communities they serve. Plus, they have shared branches that give members even more convenient locations all over the country. With shared branches, members can visit any credit union that’s within the network of more than 5,000 branches worldwide and access their accounts and other banking services. This widens the credit union's outreach and makes their solutions more accessible.

#2 - Outdated technology
This is one of the biggest misconceptions about credit unions. These institutions have lagged behind big banks in the past because they didn't have access to developers and resources that digital banking and similar solutions used to require. However, small- and medium-sized enterprise innovations today level the playing field. The industry has evolved to make these solutions available for most institutions. Credit unions today provide online banking services as well as mobile banking that you can securely access from anywhere, at any time. As consumer behavior continues to change in favor of an online experience, credit unions have sped up their digital transformations even more to stay on par with larger banks in terms of technology.  

#3 - Limited eligibility
After 1998, credit unions were able to expand membership eligibility. The Credit Union Membership Access Act gave credit unions the flexibility to offer membership to a wider group of people, making it much easier for anyone to become a member of a credit union. Moreover, you don't need to meet strict criteria to become a member. Usually, all it takes is living, studying or working in a certain area - like how Power Financial Credit Union serves the local community in 13 counties across South Florida.

#4 - Limited products and services
The first members of credit unions put their money together into savings and lent money to other members. After 1977, credit unions began to offer more products and services. In the coming years, members could apply for a mortgage loan or open a share certificate. Now, you can also open a retirement account, buy insurance products, or look for tax and money management services. Today, credit unions are able to provide all of the services you would find in a big bank. They even offer special help tailored to the specific needs of individuals, which sets them apart from other financial institutions.

Credit unions have flexibility
Amidst all these changes and misconceptions about credit unions, here's the takeaway: Credit unions are not-for-profit and are owned by their members. That means they put the financial needs of their members above those of outside shareholders. Though credit unions are smaller in the community, you will find more personalized services and flexible terms.

Larger banks do not usually offer flexible terms. In fact, they tend to provide more fixed services. For example, a bank will offer you a flat fixed term for an auto loan. A credit union, on the other hand, will take the time to get to know you, answer any questions you might have about the process and figure out what solutions is best to meet your budget and financial goals.

Ready to join?
Power Financial Credit Union offers all the services, if not more, that you can find at a big bank. We offer high-interest savings rates, low to no fees, and a wide array of products and services ranging from personal savings accounts to individual retirement accounts. Our online and mobile banking services are easy to use, making it more convenient than ever to bank from anywhere. All that is great but the best part about becoming a member is that you become part of our family!

Contact us online or visit us at any of our locations in the South Florida area and take advantage of better terms for your loan and deposit needs.