Welcome back to our series on what the big stinking deal is about credit unions. In Part One of What’s the Big Stinking Deal, we talked about why member-ownership is so important, and why it’s better than being a bank customer. In Part Two, we discuss (drumroll, please)…
Lesson Two: Not-For-Profit
You’re probably thinking, I don’t get it. Why would a credit union stay in business if it wasn’t for profit?
Good question, young grasshopper.
Both banks and credit unions earn income through loan interest rates and fees, and the profit is what is left over after expenses are paid. The difference is where the profit goes. At a bank, the profit goes to stockholders because, well, they own the place. At a credit union, the profit goes to the members because, well, you own the place. Profit is given back to members in the form of dividends (interest) on deposit accounts, reduced rates on loans, free or inexpensive services, and lower fees. The “not-for” portion of “profit” means that our purpose for existence is not earning money– it’s helping people with their personal finances without ripping them off.
What’s the Big Stinking Deal?
Stuff is usually cheaper at a credit union. Because you have a hand in the ownership, you reap the financial rewards.