We learn a lot from our parents, especially as we get older.
We are learning about independence, and as graduation grows nearer we are learning more and more about financial independence.
The most basic question you have to figure out is where to put your money.
This question isn’t as obvious as it seems - banks are not your only option. Another very promising place to keep your money safe is a credit union.
According to Investopedia, a credit union is a “member-owned financial co-operative. These institutions are created and operated by its members and profits are shared amongst the owners.”
Further, Investopedia explains how a credit union operates.
“As soon as you deposit funds into a credit union account, you become a partial owner and participate in the union’s profitability.”
According to Bankrate.com (http://www.bankrate.com/finance/credit-unions/pros-cons-credit-unions-4.aspx), here are five pros and five cons to a credit union over a bank:
1. Because it’s a not for profit organization, credit unions try and give back as much of their profits as they can to their members. This generally means lower interest rates on credit cards and loans, and higher rates on savings accounts.
2. Another perk of a credit union is that many of them do not require minimum payments a month or balance requirements in order to avoid fees.
3. There are generally lower fees at credit unions. For example, I only had to pay $5 for my checkbook from Bellco Credit Union where I know many of my friends pay $25 for them.
4. Credit unions team up with many other credit unions and even some banks so that you can use multiple ATMs with little to no fee. I enjoyed this when I went abroad because I found international banks that my credit union had joined with.
5. According to a recent survey, customers rated their overall satisfaction at a 89 percent. Credit unions are known for good service, and this can in part be because they are less concerned about making money, like a bank, and more concerned with keeping members.
However, there are cons to a credit union too.
1. Getting into a credit union can be tricky. They were originally founded for certain business employees to keep their money, for religious affiliations, or for residential areas. However, recently it has been easier to join a credit union. Check local unions to see if you qualify.
2. Not all credit unions are the same, meaning there are often inconsistencies in fee policies, ATM sharing, and their rates. It is important to research the credit union and its history before deciding to join one.
3. Fees are rising as credit unions try and compete with the market and banks. While the fees are still less than banks, it doesn’t mean those fees aren’t susceptible to federal regulation still. Back to my checkbook example, when I started my savings account at 16, checkbooks were free.
4. Credit unions lack the resources bigger banks have, according to Richard Hunt, the CEO of Consumer Bankers Association. This means they don’t have the tools to handle bigger investments such as emerging technologies; an example would be mobile banking.
5. While there are lower interest rates, there are also lower rewards for being a good customer. If you pay off your credit when its due, or pay regularly on your loans, they don’t have as big a payout as banks.
There’s a lot to think about as you consider where your money will go after Doane College, but don’t just assume it has to go to a bank.