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CFCCU Blog

Is Your Teen Financially Savvy? Part 4

By Hannah McElhose

Part 4 of 4 – Credit Unions vs Banks

On the surface, a credit union and a bank may seem similar. Some teens may think that banks and credit unions are the same thing, or even that credit unions ARE banks. But, if you dive deeper you will see that they are very different, and here’s why.

Banks are for profit organizations while credit unions are not for profit. This means that banks take their earnings and pay them out to people who own shares of stock in the bank. Whereas, credit unions take their earnings and invest that money back into the institution to give their members higher savings rates, lower loan rates, and lower fees.

Credit unions may offer more flexibility than banks. If you are someone with a troubled financial history, or if you are just new to the financial world, credit unions will typically be more willing to work with you to achieve your needs. The credit union philosophy is “People Helping People”. This is exactly why a credit union is an ideal choice for your teen's account. Will little to no credit history, a credit union will help your teen develop a sound financial future, from the ground up.  

Credit unions and banks also differ in the way they are run. In a credit union, each member gets one vote annually for the volunteer board of directors. Because they are voted in by the membership, the board is generally made up of a diverse group of individuals. In a bank, customers do not have any voting rights or say on how the bank is run. Board members are chosen by directors, they get paid, and they don’t always reflect the diversity of the customers. 

In conclusion, when choosing a credit union you will find lower interest rates on loans, higher interest rates on savings accounts, a volunteer board of directors, and members who are part owners of the credit union with a voice in how things are run. So what does this mean for you and your teen? When you need to borrow, your payment will be lower and when you want to save, you’ll earn more interest. Plus, you'll be charged less for the products and services you need. Ultimately, you and your teen get to keep more of your hard earned money.

If you need more reasons why you should choose a credit union over a bank, click here to read an article that outlines their top 10, but I encourage you to visit your local Cedar Falls Community Credit Union and hear it straight from them.

123 W 4th St. Cedar Falls, IA 50613 (319) 266-7531
420 Viking Road Cedar Falls, IA 50613 (319) 277-3690
2000 Heritage Way, Waverly, IA 50677 (319) 483-2241

www.cfccu.org

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Hannah McElhose is a Senior at Cedar Falls High School, where she is actively participating in the CAPS (Center for Advanced Professional Studies) Program. As part of her CAPS project, Hannah performed an anonymous survey of high school students about their knowledge of money, savings and checking accounts, credit and debit cards, and saving for college. Using her survey results, Hannah prepared a 4 part blog series titled, 'Is Your Teen Financially Savvy?'

Is Your Teen Financially Savvy? Part 3