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Credit Unions: Credit Where Credit
The “best” financial institution might not be what you
think. New problems call for new solutions, and in today’s
society managing debt is a challenge faced not only by consumers,
but by banks as well. Enter the age of the credit union.
By offering an ever-increasing range of financial services and
fluctuating interest rates, credit unions quickly are emerging as
a leading alternative to traditional banks.
In fact, customer
satisfaction surveys consistently favor the unique market strategy
of credit unions, and with good reason. It is time to examine the
cold, hard facts about Savings and Loans (S&Ls or credit
union).
First and foremost, it is important to understand that your
money is just as secure in S&Ls as it is in a regular bank (up
to $100,000 cash). If you take nothing else from this article,
remember this: there have been huge improvements to S&L
business practices in recent years, and the infamous crash of the
1980s is anything but representative of the modern system.
In 1995, the original Depression-era Savings and Loan Insurance
Corporation was replaced by the Savings Association Insurance Fund
(SAIF). In March 2006, the FDIC and the SAIF were merged,
sufficiently ending depositors’ worries about the safety of
their assets.
However, there are significant differences between
traditional banks and credit unions, and on these differences
credit unions come out on top. S&Ls are member-owned (bankers
have a share in the company), do not distribute dividends with the
same motive as a bank, and are representative of their members
(geography, occupation, skills).
First and foremost, it is important to understand that your
money is just as secure in S&Ls as it is in a regular bank (up
to $100,000 cash). If you take nothing else from this article,
remember this: there have been huge improvements to S&L
business practices in recent years, and the infamous crash of the
1980s is anything but representative of the modern system.
In 1995, the original Depression-era Savings and Loan Insurance
Corporation was replaced by the Savings Association Insurance Fund
(SAIF).
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| In March 2006, the FDIC and the SAIF were merged,
sufficiently ending depositors’ worries about the safety of
their assets.
However, there are significant differences between
traditional banks and credit unions, and on these differences
credit unions come out on top. S&Ls are member-owned (bankers
have a share in the company), do not distribute dividends with the
same motive as a bank, and are representative of their members
(geography, occupation, skills).
Additionally, there are hundreds of thousands of credit union
members who “save where they work,” having for decades led the
way in strengthening Savings and Loans. Work-based Savings and
Loans programs include GE, Weyerhaeuser, teachers, and state
employees.
Banks are beginning to take notice of the success enjoyed by
credit unions. So much so, in fact, there is even a movement to
pass laws limiting the most competitive and profitable credit
union trends! (If you like economics, check out the article on
S&Ls v. banks in the “Review of Industrial
Organizations”). There must be something good in it for
consumers…
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