Let’s face it – you work hard for your money. You aren’t paid for simply educating but for coaching, inspiring, and counseling. Because every dollar you earn is both personal and valuable, it’s vital that you entrust your funds with the right financial institution.
For many people, commercial banks are the only option as credit unions limit their services to those eligible, often defined by their career or region. Education credit unions, however, extend their services to those in the education profession only. This means your career in teaching comes with an additional benefit that you may or may not have known about – credit union membership.
What’s the Difference?
There are numerous differences between credit unions and commercial banks. A credit union is a non-profit financial cooperative serving specific populations whose earnings are returned to customers through low-interest rates on loans and high-interest rates on personal funds. They refer to account holders as members and membership is limited to specific populations. On the contrary, a commercial bank is a for-profit financial institution which shares its earnings with stockholders. They refer to account holders as customers, and anyone may utilize their services. Credit unions are governed by their account-holders while banks are owned are controlled by stockholders.
Credit unions and commercial banks typically offer the same services: checking accounts, savings accounts, online banking, bill pay, loans, and mortgages.
Which is better?
While anyone can open an account at a commercial bank, membership in a credit union is a privilege for those who belong to certain employers, career sectors, or regions because the of the added benefits a credit union offers. Teachers have the benefit of eligibility to join educational credit unions. Following are the ways joining an educational credit union can benefit teachers.
Governing
Credit unions are owned by their members while banks are owned by investors. Every account holder at a credit union, regardless of the account balance, has a vote when it comes to board member election. Therefore, credit unions are essentially governed by their own account holders. This gives you greater control over your assets and how they are handled on a daily basis.
Commercial banks are governed by investors and voting power directly correlates to investment dollars while credit unions are governed by a voluntary board of directors elected by its members. Every account holder holds equal voting power regardless of balance. For this reason, bank customers may worry that decisions are made in the best interest of the investors rather than the customers, whereas credit union members are represented by elected account holders who hold the same interests and risks as they do. The governing board is less likely to take risks with your money.
Personal Service
Banks serve the full population, meaning that whether you are a teacher, physician, server or truck driver, you will have access to the same services and guidance.
Because educational credit unions are open to teachers only, they work with the best interests of teachers in mind. They understand what teachers want and expect and know how to help them achieve their financial goals. Every aspect of what they do and offer revolves around goals and expectations unique to teachers.
Having access to an educational credit union is having access to financial services personalized for educators.
Financial Savings
Because commercial banks operate with the goal of making a profit, their primary focus is often commercial loans and accounts, where they see the highest earning potential. Any profit a bank makes is returned to its investors.
Quite opposite, a credit union’s sole purpose is to serve its members in the best way possible. Members’ best interests are the primary focus of a credit union and any profit made returned to members through low-interest loans, high interest on deposit accounts, returned ATM fees, and minimal account fees.
According to Geoff Williams, co-author of Living Well with Bad Credit, you should “virtually always finance at a credit union” because they don’t make opportunity profits.
Joining an educational credit union is a smart financial move.
Convenience
While credit unions are typically local with few branches, they frequently co-op with other organizations to provided added resources and benefits to its membership. Because commercial banks are in stiff competition with one another, they are not able to offer the same benefits that result from cooperation with other financial institutions.
Two great examples of benefits provided to members as a result of networking include 1) CU Service Centers, which allow credit union members to do their business at any one of over 4,000 credit union branches in the nation, and 2) the CO-OP ATM network, which refunds ATM fees to members when they use one of over 30,000 co-op ATMs in the nation.
Peace of Mind
Credit unions and banks both ensure your deposit accounts up to $250,000. However, commercial banks are FDIC-Insured, which is a federal agency while credit unions are insured by the National Credit Union Administration (NCUA). This means that credit unions do not use taxpayer dollars in the case of a collapse.
Furthermore, while credit unions are less likely to collapse due to the sense of community leading its members to pay as agreed, in cases of credit union collapse depositors typically receive their funds within three days.
Credit unions offer peace of mind.
Summary
After reviewing the differences between commercial banks and credit unions as they affect teachers, it’s clear that credit unions take the lead in every category. They offer personalized customer service, low-interest rates on loans, and high-interest rates on deposit accounts. They make decisions that are less likely to put your money at risk for the sake of their gain. They typically offer no-fee ATM access and often allow you to do your banking at convenience locations. Just like commercial banks, they insure your money.
Teachers should consider education focused credit union membership an exclusive benefit that will result in long-term financial savings. An investment in their future. After all, you work hard for that money.