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Not Just Your Grandpa's Credit Union

Posted by August on Oct 27, 2021 5:32:38 PM

Do you know what a credit union is and how it differs from a bank? If not, hopefully, by the end of this blog post, you'll have a little more insight into what a credit union is and why it may be the right financial choice for you.

Who Do Credit Unions Serve?

Before working for Carolina Trust, I knew very little about credit unions. I knew that my grandparents did their banking with a credit union affiliated with my grandpa's employer. Some credit unions, like my grandparents', have charters that require them to serve select employer groups. However, they make up only a small sector of all credit unions. Carolina Trust, for example, has a community charter that allows them to serve anyone who lives, works, worships, volunteers, or attends school in our surrounding community.

Carolina Trust began as the Myrtle Beach Air Force Base Federal Credit Union, which served the financial needs of military personnel and civil service employees. Over time, their desire to expand their service reach and directly influence the financial opportunities for individuals, families, and small businesses in surrounding communities led the credit union to apply for its Community Charter.

Why Was the Credit Union Movement Started?

So, now that you know who credit unions serve, the question still remains as to why they were created. What was missing from traditional banking that sparked this financial shift? What does the credit union movement possess that sets them apart?

The first United States credit union was established in 1909 by Alphonse Desjardins to rival the banks' financially crippling interest rates on the poor. Initially, the credit union movement was started to help people, hence the long-standing credit union philosophy, "people helping people."

Carolina Trust models its service after the original credit union by continuing the people helping people philosophy and putting members' needs ahead of profits. They seek innovative ways to provide their members with secure, reliable, and convenient services and consumer-friendly accounts for unique financial needs.

How Are Credit Unions Helping Young Adults Create Better Financial Futures?

Unlike banks, credit unions are not-for-profit and member-owned. Banks must make a profit for their investors, as where credit unions have no need to make a profit for their members. Instead, credit unions' goals are to keep their fees low, set their interest rates on savings high, and keep their interest rates on loans low.

Reducing fees allows members with regular/ lower incomes to manage their accounts more efficiently and avoid additional expenses incurred by account fees. Higher interest rates on savings accounts allow members to yield greater annual savings and reach savings goals more quickly. By offering lower interest rates on loans, members are more likely to achieve financial goals like owning a home, car, boat, etc.

As you can see, credit unions have changed over time; they're no longer just your grandpa's financial institution. Credit unions provide banking alternatives for our generation that may help young adults manage their money more efficiently and achieve financial goals more quickly. Maybe it's time you joined the credit union movement.

Topics: Personal Finance