What is a Credit Union: Features, Benefits, Working

Credit Union in USA

Credit Unions in USA is a not-for-profit institution that works similarly to a bank. It provides banking services accepting deposits, lending loans, and other financial services and products. Aspiring students planning to pursue higher education can consider taking education loans from credit unions due to competitive interest rates, flexible repayment terms, and opting for personalised services.

Unlike banks, credit unions in USA offer student loans not for profit but for better reasons. These help you overcome the financial gap by funding your education. In this blog, we will cover all about credit unions, features, advantages and education loans from credit unions.

Overview of Credit Unions in USA

A credit union is a member-owned organisation. It means that the member of the credit union is a part owner. It is owned and controlled by the members who use their services. The working of a credit union is based on a model as follows- firstly, the members buy the shares of the cooperative or pool their financial resources to create funds. These funds are then used to provide loans with that amount. Other financial services and products like demand deposit accounts are also offered to generate income.

Also Read: Worried about rise in education loan interest rate due to inflation? Check here all about Inflation and its effects on education loan.

Features of Credit Unions in USA

Some of the basic features of credit unions can be understood by following parameters like membership, ownership, financial services provided, and loan services. Let’s have a look at them-

Membership- Membership form is a basic principle in credit unions in USA. People who wish to join will as members, only after fulfilment of certain requirements. These include relating to residence, employment, or being connected to a certain organization.

Ownership- Members of the credit unions do not have equal shares of the assets, nor do they get votes depending on the amounts of deposits they have in the unions. This democratic structure would guarantee that decisions would be made by the members themselves (and not by the government) doing good to them.

Financial Services- Credit unions provide the community with a diversity of financial services which include savings accounts, loan credits, credit cards and other investment products.

Loan Services- The credit unions not only function as organizations that provide credit facilities to members, but are also known as the leading lenders and financial solutions for friends, family and co-workers who are already members. Besides this, such education credit can be drawn as per the requirements of international students as well.

How Federal Credit Unions Work?

Credit Unions in different countries have different workings. Subject to the eligibility and conditions set by the credit unions, interested people can become members and put in funds for savings. Those in need of loans can inform the member by providing the necessary documents and start making payments based on the conditions set.

  • Membership Application- The association opens its membership doors to the ones who are interested in becoming a member, the conditions being the same as the ones set by the credit union
  • Deposit and Savings- Members put funds into savings and checking accounts which may pay dividends or interest, representing a benefit to the members.
  • Loan Application- Members are allowed to request loans of any sort such as education loans through providing the relevant documents and complying with the required creditworthiness standards.
  • Loan Approval and Disbursement- After approval, money is disbursed to a borrower who on his part, makes payment to the same conditions under which the agreement is based.

Also Read: Want a quick education loan to study abroad? Check here all about SBI Education Loan Processing Time

Credit Unions in India

Although credit unions in India are not as popular as credit unions in the USA, their impact is growing immensely in rural and semi-urban areas. Due to its cooperative nature which also offers partial ownership of the union, many people consider it as an attractive financial option.

Some of the best credit unions in the USA for students

  • Navy Federal Credit Union
  • PenFed Credit Union
  • Alliant Credit Union
  • Suncoast Credit Union

Benefits of Taking an Education Loan from a Credit Union

Aspiring students can consider taking education loans from credit unions. They offer several benefits like lower interest rates as compared to the banks and flexible repayment options. The best part is that many credit unions offer personalised services as per the needs of the member. Here are some of the benefits of taking an education loan from a credit union- 

Competitive Interest Rates- As compared to banks, credit unions usually come up with reduced interest rates on loans and enhance the opportunity for students to study.

Flexible Terms- Credit unions offer flexible repayment terms, customized to suit the situation of individual students- like family income-based repayment systems. 

Personalized Services- Credit Unions focus on offering customized services that suit students’ financial needs which means that they will use their skills to find solutions for students.

Community Support- Credit unions help students not only save some money but also contribute to the growth of the cooperative community and the development of credit unions all over the country. 

Important Guidelines

Among the various educational loans available to international students willing to go abroad for studies, credit unions happen to be one of the best alternatives. Before applying for a Federal Credit Union education loan, students should consider the following:

  • Eligibility Criteria- Know about the general membership rules of the credit unions. Make sure to become its member and that it considers your loan application.
  • Loan Terms and Conditions- Always check the conditions of a student loan, such as the interest rate and the options available for payment, as well as any fees that may apply. Compare the interest rates with that of what other Indian banks are offering.
  • Documentation Requirements- Make a list of documents as required by them like the the application forms, letter of enrollment, visa status and financial documents for your loan application.
  • Repayment Plans- Consider a range of repayment plans and select one that is linked to income while still meeting career aspirations after graduation.

FAQs

What is a Credit Union?

A credit union is a not-for-profit organisation that provides banking services accepting deposits, lending loans, and other financial services and products.

Are credit unions and banks the same?

Credit unions are similar to banks in terms of providing financial services like accepting deposits and lending loans. However, they are not the same. While banks are for-profit entities, credit unions are not-for-profit organisations which are owned by their members.

What are the benefits of taking an education loan from a credit union?

Aspiring students can consider taking education loans from credit unions. They offer several benefits like lower interest rates as compared to the banks and flexible repayment options.

What are credit unions in India?

Credit Unions in India are not-for-profit organisations that are popular in rural and semi-urban areas in India. Although they are not as popular as the US credit unions like the Federal Navy. PenFed, Alliant and Suncoast Credit Union, their impact in India is growing immensely.

How can I get an education loan from the Federal Credit Union?

Before applying for a Federal Credit Union education loan, students should consider the eligibility criteria and then apply by filling out the application form. One must always check the loan terms and conditions, and required documents, and consider the repayment plans that align with your needs.

This was all about credit unions. Among the various educational loans available to international students willing to go abroad for studies, credit unions happen to be one of the best alternatives. Aspiring students can consider taking student loans from recognised credit unions and pursue their study abroad dreams.

To know more about education loans, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.

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About Shubhika Garg

Hey there! I'm Shubhika- a proud graduate in English Literature and Language from Delhi University. My journey as a content writer transitioned from online teacher into the world of words. Stepping into the domain of blogs and articles, I discovered my passion for writing growing deeper and stronger. Having said that, I have experience of writing for diverse industries in automobile, technology, ed-tech, finance and mental-health; crafting details to help you find the solution to what you are looking for. Join me as I invite you all explore and learn together.

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