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How Credit Unions Work

On the surface, banks and credit unions are similar. Both provide many of the same services: cashing checks, lending money, storing funds, and offering other financial products such as credit cards. The difference is in what happens behind the scenes.

Credit Union Basics

Credit unions are not-for-profit organizations. While a credit union may earn profits, those profits are funneled back into business operations, paid to members as dividends or used to offer additional benefits for members. Credit Union profits don’t go to Wall Street investors. For example, KeyPoint Credit Union uses profits to offer lower loan rates to members, plus free services including checking and Online Bill Pay. They also have programs that allow members in good standing to earn free rewards for using their debit cards or delay a payment on their loan. 

The Credit Union Difference

Unlike banks, credit unions don’t have customers – they have members. Credit unions like KeyPoint are entirely member-owned. When you open an account, get a credit card or loan, or use any of your credit union’s other financial services, you become part of a co-op community and part-owner of the credit union. On paper, credit unions are also different from banks because they are exempt from paying certain federal and state taxes. These tax breaks allow your credit union to retain even more money that will benefit members.

Where Does Your Money Go?

When you do your everyday banking with KeyPoint, your money helps other members of your community. The funds you have in your checking and savings accounts are part of a larger pool of money that is used to lend needed funds to other members.

 Let’s simplify things for a minute: Imagine you deposit $1,000 into your savings account today and don’t touch it for a year. Your thousand dollars is accruing interest that will be paid to you by your credit union. In the meantime, the credit union can use your money to help other credit union members – for example, when a fellow member needs a home equity or auto loan. The $1,000 is still yours to take out at any time (plus any interest accrued), because your money can always be replenished from the community pool.

A Community That Cares

When you join a credit union, you become part of a community with shared goals. We’re here to help maintain, manage and grow your finances. Your credit union can also make it possible for you to reach important goals, such as saving for your child’s education or buying a new home. For information on joining the KeyPoint Credit Union community, call 888-255-3637, visit your local branch or contact us online today.