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How do credit unions work exactly?

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    How do credit unions work exactly?

    I see many posts recommending credit unions for banking and borrowing but how does that actually work? Aren't credit unions generally for specific groups like firefighters or military personnel or employees of a particular company? I know that's how it used to be. Has that changed? Do they let just anyone come in now?
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

    #2
    I was able to join my credit union because a relative worked for them.

    My siblings were able to join that same credit union based on the colleges they attended.

    My wife was able to join the same CU because I am a member.

    My employer (non-financial industry) also has a credit union but the one I am in was better for savings so I didn't bother to join the work one.

    One example for you to look into: I know you live in New Jersey so I found this one you can check out to see if it would be good for you. (Membership based on the town where you live, work, worship).

    If you're not in south jersey just google Federal Credit Union near me. There is also one in North Jersey.

    https://www.southjerseyfcu.com/about.../join-now.html
    Last edited by Jluke; 06-09-2017, 12:55 AM.

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      #3
      One other note on my credit union.

      I joined in 1998. It was $5 to join and that sits in my savings account and is untouchable.

      I have never set foot in one of their branches. Reason: Distance and they only have 2-3 locations. For the refinancing I went to a CU affiliated office near my work (they would have come to my work but that would have been difficult security wise) to sign the paperwork.

      I've had two auto loans, an original mortgage and then 2 refinances.

      Initially I could do banking through their automated phone system (transfer money between checking and money market, pay loan, etc). Then it became web based like everyone else. And there's an app as well
      Last edited by Jluke; 06-09-2017, 01:09 AM.

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        #4
        Originally posted by disneysteve View Post
        I see many posts recommending credit unions for banking and borrowing but how does that actually work? Aren't credit unions generally for specific groups like firefighters or military personnel or employees of a particular company? I know that's how it used to be. Has that changed? Do they let just anyone come in now?

        I think the trend is to expand membership. I found a CU to which I was not a member and I didn't meet any of the normal membership qualifications, but I wanted to join because they had 3% interest for an add on 3-yr CD account. I was able to become a member when I joined another non for profit financial awareness organization for $5.00. It is always good to check the membership requirements.

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          #5
          Our primary CU is regional (where we do most our banking). You just have to live or work in the area. & we just signed up for a 3% savings account because it was a CU that we knew our parents banked at; we could sign up as family members.

          I have joined many others in the past for promotional rates or high-interest CDs. They were looking for deposits and opened up membership to a wider group. Basically, anyone could become a member.

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            #6
            Originally posted by disneysteve View Post
            I see many posts recommending credit unions for banking and borrowing but how does that actually work? Aren't credit unions generally for specific groups like firefighters or military personnel or employees of a particular company? I know that's how it used to be. Has that changed? Do they let just anyone come in now?
            Credit unions and banks work basically the same way. Both accept deposits and use those funds to make loans. Both are safe: Banks are insured by the Federal Deposit Insurance Corporation, credit unions are insured by the National Credit Union Administration, both up to $250,000 per depositor.

            Unlike banks, credit unions are financial membership organizations. You don't open an account at a credit union, you become a member and use your deposits to buy shares in the business.

            Credit unions are non-profit organizations. Their profits are distributed back to their members. Because of this, credit unions are financially able to charge lower fees than banks and pay higher interest rates on savings accounts, money market accounts, interest checking accounts and certificates of deposit. Also, being non-profit, they have substantial tax advantages over banks - they pay no corporate income taxes. For decades, banks have complained that credit unions are given a grossly unfair competitive advantage in the marketplace because of their non-profit status, and they have a valid point.

            Credit unions tend to offer the best rates on credit cards, too. If you are looking for a home loan, the mortgage rates at a credit union are pretty similar to other lenders because that paper is ultimately still backed by Freddie, Fannie, HUD, and FHA, but you are likely to pay lower closing costs and have an easier time qualifying for a loan.

            Membership in a credit union used to be very restrictive and only available to people who worked for particular employers. Today it can be much easier to find a credit union to join. Many credit unions are still affiliated with an employer, but others are tied to a community, a county or even a state. Sometimes trade associations or schools have credit unions.

            An increasing number of credit unions have virtually no membership requirements other than a quick online application.
            Last edited by TexasHusker; 06-09-2017, 06:30 AM.
            Never underestimate the power of stupid people in large groups.

            -George Carlin

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              #7
              Originally posted by TexasHusker View Post
              If you are looking for a home loan, the mortgage rates at a credit union are pretty similar to other lenders because that paper is ultimately still backed by Freddie, Fannie, HUD, and FHA, but you are likely to pay lower closing costs and have an easier time qualifying for a loan.
              Not sure that is accurate. If the loan is going to be sold on the secondary market they all need to meet the same standards.

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                #8
                Originally posted by TexasHusker View Post
                Both are safe: Banks are insured by the Federal Deposit Insurance Corporation, credit unions are insured by the National Credit Union Administration, both up to $250,000 per depositor.
                This is not automatic. Just as you would go to the FDIC web site to make sure that a bank is insured before depositing money, you would want to go to the NCUA web site to make sure that a credit union is insured. I do not know all of the details, but I've read that some credit unions that are state and not federal can opt to have private insurance instead of NCUA insurance. If you want more info, I suggest you head over to the DepositAccounts.com and do a search. That is my go-to site for all things banking related.

                I've joined several credit unions. I've been eligible for membership in some based on geography, and some I had to do a bit more work to be eligible (joining a non-profit group in order to qualify for membership). And there have been some that I'd like to join in order to take advantage of a good CD rate, but haven't been eligible.

                Some CUs belong to a National Shared Branch Network, which means that if you are a member of one CU you can go to any CU in the network for service. I have been able to conduct some business with out-of-state CUs by using a shared branch near my house.

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                  #9
                  Originally posted by disneysteve View Post
                  I see many posts recommending credit unions for banking and borrowing but how does that actually work? Aren't credit unions generally for specific groups like firefighters or military personnel or employees of a particular company? I know that's how it used to be. Has that changed? Do they let just anyone come in now?
                  disneysteve - Are you looking at credit unions as an option to fill a specific need? If so, maybe some of us here at SA could make specific recommendations. As someone that the banking industry classifies as an "overbanked consumer" this is one area that I think is right in my wheelhouse.

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                    #10
                    Originally posted by scfr View Post
                    disneysteve - Are you looking at credit unions as an option to fill a specific need? If so, maybe some of us here at SA could make specific recommendations. As someone that the banking industry classifies as an "overbanked consumer" this is one area that I think is right in my wheelhouse.
                    It was more of a general question because I see the suggestion to go with a credit union come up so often. I was under the impression that they were only available to specific populations of people but it sounds like pretty much anyone can join one now.
                    Steve

                    * Despite the high cost of living, it remains very popular.
                    * Why should I pay for my daughter's education when she already knows everything?
                    * There are no shortcuts to anywhere worth going.

                    Comment


                      #11
                      credit unions are non profit organizations that may or may not have criteria on who can join. it really depends

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                        #12
                        Credit Unions

                        Hi, Disneysteve.

                        Credit unions are sometimes for specifics groups, like the military or teachers or employers, for example. But sometimes you can be a members just based on living in a certain area. Membership in a credit union is beneficial, because they sometimes have better rates for savings, loans, etc. To find out if you can join one, click here.

                        http://mapping.ncua.gov/

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                          #13
                          I'm a member of 2 credit unions.

                          One, I was allowed to join through my employer.
                          The other, I was signed up with them by a dealership for an auto loan.

                          Most of them have some stipulation before being allowed to join.
                          Brian

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                            #14
                            I found Georgia's Own Credit Union though A Smarter Choice, which is a good idea if you want to try one. It was when my bank decided to try to charge for debit cards (they saw the people leaving and decided not to, tho Wells Fargo now charges for checking, ick. glad I left)

                            All that I needed was a GA driver's license, and I've never looked back. Maybe you can find one there like that.

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