According to Croteau (1963), a credit union is considered as a financial cooperative that is owned and controlled democratically by the members, and purposely intended to deal with their financial “health” (Croteau, 1963). Moreover, credit union grant credits to the members at lower interest rates, encourage them to save, distribute profits, and provide education for them. Credit unions are available worldwide, and their systems of operations vary significantly in terms of their total assets and average asset size.
Hillman (2005) points that credit unions differ from banks and other financial institutions in a variety of ways based on operations and formation. He outlines that customers are the real owners of the given credit union. Customers are the individuals who have accounts with given credit union; thus, the executive management is directly answerable to the customers and mainly makes decisions that favor the customers (Hillman, 2005). In a banking institution, the management decisions are mainly intended for the benefit of the shareholders and not the customers. This means that the credit unions are mainly formed purposely to deal with the member’s financial status and provide services which are customers friendly.
The National Association of Federal Credit Unions
The National Association of Federal Credit Unions (2008) points some of the benefits of credit unions including those which pay higher yields on saving and certificates compared to commercial banks (The National Association of Federal Credit Unions, 2008). The yields are also distributed to the members, and their accounts are insured by federal state laws. Credit unions offer their loans and attach lower loan rates than the commercial banks. Therefore, this helps their members to save more money with them. Credit unions usually provide similar services as commercial banks but charge lower fees. Credit union are non-profit organizations, and if an individual becomes a member of the given credit union, he participates in the election of the board of directors. Election of the board of directors is based on democratic voting, where one person votes once, regardless of whatever amount is invested in the credit unions. The profits realized by the credit union are shared with the members in the form of attractive savings and loan rates; unlike commercial banks, where the profits are shared with shareholders. Credit union membership is lifetime. When an individual becomes a member of the given credit union, he does not lose member status even after changing occupation and place of residence. Credit unions offer small unsecured loans to the members, unlike in commercial banks which refuse to offer small personal loans. They enable one to qualify for a credit union credit cards when banks reject extension of the credit to an individual.
Therefore, I prefer credit union to bank membership due to the benefits they offer to the members. Most credit unions engage in business to provide customer satisfaction. Being a customer, I prefer to be provided with the services which will fully satisfy my needs. The main goal of the customers is to get customer satisfaction from the services provided by business organizations. Since credit unions offer such advantages, and their main motive is customer satisfaction, I will highly advocate their services.