If one is looking forward to buy a car or refurnish their homes or is searching funds then probably he will be seen in a bank premises or a banking websites. It is a common thing that every such individual trust banks. One is also assured that bank funding procedures are very tough and past credit problems can also be a barrier issue. Where to go now? One may ask.
The answer is credit unions. The problem lies in research. Probably people are not aware about alternatives other than banks. Well credit union is one of them. Credit unions are financial cooperative institutions which is owned and controlled by a few of its members. One may find credit unions in the areas where the incomes of people are low and hence they offer savings.
Credit unions are an effective alternative for banks for the very fact that only those people who have an account in the credit unions are its members whereas its board of directors is elected by member voting. Credit unions have a governing rule so as to clarify who can join the union. The people who work for same organization can join it. Hence there are limited persons to cater to and this is where credit unions excel its bank counterparts. As there are limited persons, one can expect a more personal relationship between the staff and members.
One of the many reasons which lead to the downfall of many banks ate the grants of risky loans and exotic investments. Due to limitation this is not seen in credit unions and hence there is a sense of security among the members that their money is safe. Credit unions stick to the basics such as requirement of down payments and income verification on mortgage loans which adds to their stability factor.
Some factors which are making credit unions more competitive are
1. Self-sufficiency and institutional development
2. Due to economic meltdown, banks have limited lending but credit unions are still lending
3. Access to better services than banks.
4. It is a kind of local economy and one can contribute towards it.
5. High repayment rates.
6. Safety and efficiency through financial reforms.
Hence one can say that the pace and efficiency with which credit unions are expanding they might soon be well par to some of the biggest banking institutions of the world.
