How are credit unions different from banks in South Carolina?
Editor’s note: This blog was originally published on Jan. 26, 2021, and has been updated for accuracy and relevancy.
In this blog post, we'll be covering:
Who actually owns banks and credit unions?
Credit unions and banks are both designed to help you open accounts, save money, and take out loans. But let’s discuss the important differences in the way credit unions and banks go about their business before you mistake the two for one another.
What is a bank?
Banks are for-profit businesses. They accept cash deposits from their customers. Banks loan that same money to people and businesses, collecting a profit off the interest.
Banks are for what? For-profit.
You might be asking yourself what this means if you currently have an account at a bank. It’s simple: any profits made by a bank are used to pay out dividends to shareholders and savings account holders. Dividends are payments you receive for saving or investing your money.
As a member and a shareholder at Carolina Foothills Federal Credit Union, you receive dividends on any accounts that earn interest.
Shareholders control the decision-making at banks. The more shares you own, the more votes you get.
Bank board members are paid and act independently of bank customers, who have no say in the decision-making.
What is a credit union?
Credit unions run in a way that benefits their members directly.
It all starts with the fact that credit unions are owned by their members, aka, you!
Credit Unions’ Board of Directors is made up all volunteers and members. Shares don’t determine how much voting power you have at a credit union, either. Every member carries one vote.
Think of the way credit unions operate in a savings cycle:
Members deposit money into their savings accounts
The credit union loans the money to other members
The credit union returns the profits made on loan interest to its members
Members complete the cycle by receiving lower interest rates and higher savings rates
The credit union motto is “People Helping People,” and it’s no wonder. Our savings cycle example illustrates how credit union members benefit from borrowing money from one another.
| BIG BANK | "I wanna know..." | CREDIT UNION |
|---|---|---|
| Private investors, share holders, and stock holders, none of whom are necessarily customers of the bank. | Who owns it? | All members with funds deposited at the credit Union, and who actively use the credit union’s services. |
| Maximum profitability. Banks have led in yearly profits for years, sharing the top spots with the oil industry. | What’s its motive? | Not for Profit. Not for Charity. But for Service. That's actually the recognized credit union creed. Sums it up nicely. |
| Yes. Up to $250,000 per account by the FDIC, a federal agency enacted in 1933 to regulate & insure banks. | Is it insured? | Yes. Up to $250,000 per account by the NCUA, a federal agency enacted in 1934 to regulate & insure credit unions. |
| The FDIC uses tax money to cover bank losses. In fact, billions of tax dollars have been used by the FDIC since its inception. | Does it affect the taxpayer? | The NCUA never uses tax money to cover its losses. credit unions fund their own insurance, costing taxpayers and members NOTHING. |
| A paid governing body that oversees banking operations. Board members are appointed by bank investors and are often rewarded for maximizing proft. They can hire and fire the President/CEO. | What is its Board of Directors? | A volunteer unpaid governing body elected from amongst the membership by the very members they serve. It sets policies, oversees operations, and looks after the credit union and its members. |
Credit union membership is community-based
Credit unions like Carolina Foothills FCU are financial cooperatives. That means you have to belong to your local community, or field of membership, to join.
Most credit union fields of membership are based on the following:
Location: If you live, work, go to school, or do business in the same area as your local credit union, you qualify to become a member (some credit unions include worship in their field of membership)
Family: If you are related to a current member, you qualify to join your local credit union
Job: Select employers sponsor many local credit unions.
Membership groups: If you belong to a local place of worship, labor union, school, etc., you qualify to join certain credit unions
Meanwhile, anybody can become a bank customer, minus the benefits of ownership. There’s a credit union for EVERYONE! It’s part of being a financial cooperative!
Who can become a member at Carolina Foothills Federal Credit Union?
Membership at Carolina Foothills FCU is open to anyone who lives, works, worships or attends school in:
Spartanburg
Greenville
Gaffney
If you have a family member that meets any of the criteria listed above, they also qualify to join. Any employee of our growing list of more than 125 local companies also qualifies for membership.
All you need to do is maintain a $5.00 balance in your new share savings account, then you’re eligible for all of the following products and services:
Checking accounts
Click the button below to learn more about membership, or come visit us at one of six locations.
Check out the graphic below. Notice a pattern? The number of credit union members in the United States has grown every year from 2013 to 2020.
Credit unions offer better rates than banks
Credit unions are traditionally known for operating in the best interest of their members. That includes offering loans for all purposes at competitive interest rates.
Because banks are driven by profits and shareholders, rest assured that any loan you apply for at a credit union will have a better interest rate.
Bring us your auto loan at Carolina Foothills FCU and get pre-approved for a competitive interest rate.
We have the numbers to back it up
Click here to see how Carolina Foothills FCU, among other credit unions in the United States, posted better national average rates** than banks on the following products:
Deposit products
Home loans
Auto loans
**Credit Union and Bank Rates for September 2021
Find a surcharge-free ATM near you
Credit unions may be limited to the region, county, or city you live in. However, credit unions every day are implementing co-op financial services (ATMs you can easily access with no fees even if you are not a member of that specific credit union), updating mobile apps, and more.
The co-op shared branch network of many credit unions has 5,600 branches and 54,000 surcharge-free ATMs available to members.
Why join Carolina Foothills Federal Credit Union?
Carolina Foothills FCU is a member-owned organization that strives to provide financial services to ensure stability for our members, employees, and communities at all stages of life. Our main branch is located in Spartanburg, South Carolina.
We understand you can’t always trust the way others do business. It’s important to find a financial institution that meets all your needs.
Good thing there’s a credit union for EVERYONE! That includes Carolina Foothills FCU. Come Grow With Us.
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