A guide to understanding how credit unions function and what are their advantages.
Credit unions are established when a group of people who work together, or live together, or have some other common denominator, decide to help themselves in various financial situations rather than working with banks. Oregon credit unions took a bit longer to establish, mostly due to the scarce population of the state, the mostly seasonal and cyclical branches of the states’ economy and the legislative void in this area. Nowadays, with better rates on deposits and money markets, an Oregon credit union, like most in the country is a suitable alternative to restrictive and rigid normal bank policies.
What is a credit union?
A credit union is a member-owned financial organization, operating on the principle of people helping other people. It provides their members with financial services but, unlike banks which are a profit driven organization, a credit union is a non-profit one. This is why it enjoys a tax-exempt status.
The first Oregon credit unions were established in 1915. Most Oregon credit unions appeared, as in other parts of the country, around a church or a factory or even a small town, in order to deal with the needs of the people that lived or worked there. They were formed especially by people that would normally be rejected by banks or did not want to engage with bank policies. For instance, one Oregon credit union started in 1954 with a professor of agriculture at what is now Oregon State University. He would use a shoebox and whenever a member of the union needed financial aid he would go around the campus and collect money in that shoebox from other members of the union.
Since then things have much improved, and credit unions, depending on the number of members and branches, can even rival traditional financial services providers in terms of security, stability and reliability.
How to become a member?
Traditionally members of a credit union needed to work together in the same place, or industry, or live in the same town or go to the same church. In more recent years the terms of membership have loosened and becoming a member has been made easier.
Technically anybody can become a member of any credit union. But if you want to do any business with one you have to be a member of that union. Becoming a member in an Oregon credit union, for instance, is as easy as opening an account and depositing a nominal amount of money. By doing so, you become a partner in that union and get to vote in determining the board of directors and other affairs of the union.
Pros. and Cons. of credit unions
One of the biggest arguments in favor of credit unions is that they are exempt from paying corporate income taxes due to the fact that they are non-profit organizations. Another big advantage of these types of financial institutions is that they need to generate just enough income to fund their daily operations. This means that they can work with narrower operating margins than banks. This, in turn, means that they can offer their members lower fees on services such as ATM withdrawals and checking accounts, and higher interest rates for deposits.
On the other hand, choosing to work with a credit union instead of a bank, means that you have to accept certain downsides, spurring from their size and general way of doing things. For instance, credit unions generally use less and lower tech. Not having the same money to invest in technology, like banks have, you will have to deal with the fact that you will not find the same level of security or website features that banks have. Although, some bigger unions do offer mobile payment and banking methods that can be comparable with those of a major financial services player.
Another drawback of working with credit unions is that they do not offer the same number of options as banks do. An example of this can be the fact that a major bank operating in the United States offers up to 21 types of credit card options, from debit to reward to student cards, while the second biggest credit union in the US only offers one. In all due fairness, they were not designed to operate on such levels or offer such services to begin with.
Also, due to the fact that they are smaller, and thus do less business and require less personnel to operate, they could be restricted to a more rigid schedule. However, some credit unions do offer around the clock customer support via hotlines.
Whatever your financial needs may be, just remember that credit unions are viable options in many cases. Also, becoming a credit union member and working with a credit union usually means that you are helping other people just like you.
Resource Box: If you already are a member of an oregon credit union or are looking to join one of oregon credit unions just remember that the best thing to do is to understand what they are and what they stand for.