In the world of finance, credit unions are relatively new players, with the first credit unions coming into operation in the 1950s. Now there is something like 120 credit unions and building societies in Australia with over 4 million members, so there must be quite a lot about credit unions that people like. While banks have been the traditional means of saving ‘ or at least keeping ‘ your money, they have always charged high fees and given little in the way of interest. It is only since the advent of credit unions that banks have increased their interest rates for savings accounts. They had to, to compete with the credit unions. Apart from lower fees and higher interest, the main difference between a bank and a credit union is that those who do their banking with credit unions are actually members. That is, they hold shares in the credit union and so they are paid dividends when the credit union makes a profit. Of course, people can – and do – hold shares in banks; the difference is that a shareholder in a bank need not also be a customer of that bank. With a credit union, you cannot hold shares in it unless you are also a customer. And you must be a customer to get shares. Holding shares in the credit union means you are a member and so have the right to vote in how the institution is run. What’s more, you and every other member have an equal vote no matter how much money you have or how many shares you hold. What could be fairer than that?
Mel writes about credit union among other finance related topics. Article Source:http://www.articlesbase.com/finance-articles/credit-unions-how-do-they-differ-from-banks-1496568.html
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This post was written by MoMoney on November 24, 2009
