As long as you live, you will always need money to solve your needs. There are choices regarding ways you can get money. You can source for a quick loan, travel loan or even a debt consolidation loan from a bank. Besides that, getting money from a credit union could also be a good option to try out. The credit union offers some financial products and services that banks offer. The meaning of a credit union, common requirements, how they relate to banks, etc are all-inclusive in this article.
What is a Credit Union?
A credit union is a form of financial institution, just like a bank. But the difference is that the members of the credit union own it. It operates as a nonprofit entity that aims to serve its members rather than seeking to earn a profit. Employees and people of the same interest usually come together to form a credit union. And this is for serving the best interest of its members.
A credit union often offers better savings rates, lower loan rates, and because of this, the fees are low. A credit union usually has requirements if someone wants to join them.
What are common requirements to become a Credit Union member?
Before you can become a member of a credit union. There are some requirements you must meet and they vary depending on how they organise the credit union.
The following are the common requirements for a credit union:
- The members must have something in common to join a credit union.
- When you couldn’t meet any of their membership requirements. Some credit unions could require you to pay a small fee to become a member.
What are the Credit Unions in Ghana?
There are credit unions that exist in Ghana. However, we will look at the most prominent ones.
The following are the Credit Unions in Ghana:
- Brong Ahafo
- Greater Accra
- Upper East
- Upper West
How do credit unions differ from banks?
Credit unions and banks relate, but they operate differently. And this difference sets them in worlds apart.
The following is how credit unions differ from banks:
- Credit unions do not operate to make a profit. Whereas, the sole aim of banks’ existence is to make a profit.
- Credit Unions would require you to become a member and co-own the credit union. Whereas banks do not need you to be a member of the stakeholders or co-own the bank.
- The existence of credit unions is typically local (within a geographical area). Whereas the existence of banks is typically national.
- The amount of product offerings from credit unions is usually not much. Whereas that of banks encompasses a wide variety.
What are the pros and cons Credit Unions have?
There are pros and cons of every phenomenon, and this helps us to get the bigger picture of that phenomenon. This bigger picture enables us to weigh the two sides of the coin. And then, we could decide whether it’s good for us to try out.
The following are the pros of Credit Unions:
- Credit unions usually have decision makers close by. And this quickens the access to loans or other financial transactions for members.
- They most times offer members higher interest rates on their savings accounts.
- The fees they charge are typically lower than fees from other financial institutions.
- Credit unions offer lower interest rates on loans that members get. Even if it’s a mortgage loan, car loan or personal loan you want.
The following are the cons of Credit Unions:
- You must meet credit unions’ requirements before you can become a member.
- The products and services credit unions offer are usually lower than the ones other financial institutions, especially banks, offer.
- The credit unions do not exist in several locations like most financial institutions. Because of their structure, they typically exist in communities the credit unions serve.
Because a credit unions’ major goal is to serve their members. They do not prioritise profit over the full satisfaction of their members. They help their members with the money that would have been profit. Besides that, the members of credit unions enjoy better interest rates on their savings. And also, they have lower interest rates on the loans they get from their unions. So, if you’re looking for a community that focuses on their members. With better interest rates and lower fees, a credit union could be the best option for you to try out.