Credit Unions: Leading the Way

“Not for profit, not for charity, but for service”

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You Will Know Major types of insured

financial institutions Basic terms Differences between credit

unions, banks, thrifts and check-cashing services

Types of accounts Types of services

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Insured Financial Institutions Banks Credit Unions Thrifts

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What is a Bank?

For-profit financial institution

Owned by a group of people called stockholders

Profits after expenses are returned to stockholders

Business strategy is to maximize profits for owners.

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What’s a Credit Union?

Not-for-profit financial cooperative

Owned by its members

Profits are “shared” with the members in the form of lower rates on loans and higher rates on savings

Member service is the primary business philosophy

Serve a defined field of membership

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What is a Thrift?

For-profit financial institution

Used to be called “savings & loan” (S & L)

Primary business is home mortgages

Many thrifts have converted to banks in recent years.

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Other Businesses(not financial institutions) Check Cashing Service:

• Charges high fees for cashing checks

Pay Day Lenders:

• Very high interest rate loans

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Keep Your Money in An Insured Account Safety Convenience Cost Security Financial Future

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Insures deposits in credit unions Backed by federal government Not one dollar of taxpayer money

has been used to create or maintain the credit unions’ share insurance fund.

The NCUA Share Insurance Fund is the strongest of its kind.

All Michigan CUs are insured by NCUA

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Brief History of Credit Unions First Credit Union organized in

Germany in 1840’s. First U.S. credit union was St.

Mary’s Parish C.U. of Manchester, New Hampshire, organized in 1908.

Financial Health Credit Union was organized in 1936.

Purpose: Formed by ordinary working people coming together to help each other prosper.

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Credit Unions: Promote Economic Development Committed to fostering economic

development & helping individuals attain self-sufficiency in America & the world

CU’s in 93 countries are a stabilizing force that gives diverse peoples the opportunity to practice democracy within a member-owned organization.

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National Credit Union Foundation (NCUF)“Providing a pathway to consumer financial

independence”

Supporting 3 key components: Access: NCUF funds projects that provide

access to quality, affordable financial services for under-serviced groups

Financial Literacy & Education: Funds programs that improve the financial literacy of consumers through education

Asset Accumulation: Funds a range of activities that provide direct impact on a consumers asset accumulation, from a basic savings account to a first-time home purchase.

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Share/Deposit Accounts

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Deposit

A deposit is money you add to your account using a deposit slip.

You can also deposit money electronically through “direct deposit” of payroll, pension, or a government check.

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Share

At a credit union, the money in your account is an investment, represented by shares.

Sometimes your account is called a share account.

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Balance

Balance is the amount of money you have in your account.

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Withdrawal

Withdrawal is the process of taking money from your account using:

Checks

Withdrawal slips for cash

ATMs/Debit Cards

Electronic withdrawals

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Fees

A fee is when a financial institution takes money out of your account. Examples,

Service Fee • monthly maintenance fee

Penalty• bouncing a check

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Interest

Interest is extra money in your account that you receive for keeping your money in a financial institution.

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Dividend

At a credit union, you earn dividends on your shares.

IRA deposits and certificates of deposit (CDs) pay interest.

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Accounts

Savings/Share Account

Your basic (membership) account, designed for the purpose of safeguarding and accumulating money.

Checking Account/Share Draft

An account that lets you write checks to pay bills or buy goods.

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An ATM (automatic teller machine) can be used 24 hours a day to:

Deposit –checks only

Withdraw – available cash

Transfer money

ATM

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Debit Card

A debit card is a plastic card that: Is used to pay for goods or services Deducts funds electronically from your account at time of transaction Has a MasterCard or Visa logo

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Direct Deposit

Direct deposit is one way of receiving your paycheck or benefit check electronically.

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Loans

A loan is money you borrow from a financial institution with a written contract to pay it back later.

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Money Order

A money order is similar to a check. It is used to:

Pay bills

Make purchases

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Automated Telephone Banking

Audio response services allow

you to:

Check your account Transfer money Obtain account history Stop payment on a check Obtain branch hours Report a lost, stolen or damaged card

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On-Line Financial Transactions On-line banking or home banking

allows access to your account from your computer terminal.

Check balances, balance your checkbook.

Make loan payments

Pay bills on line

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toward having a sound financial future!!

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