In today's financial world, it's getting more and more difficult to tell the difference between traditional "banks" and organizations which may be referred to as "non-banks." Credit unions, for example, offer many of the same services as traditional banks, but are very different in terms of their internal organization and how they serve markets. Additionally, they are governed by different federal regulations and play different roles in the economy.

You may say to yourself…"I've seen billboards and advertisements everywhere inviting me to open an account at my local credit union. What is a credit union? Can I do my banking there?"

A credit union is a non-profit financial services organization formed to provide banking services to their employees and members. They generally are sponsored by an employer or association so, in order to join, you must be eligible by being an employee or member. Usually, there is some commonality among credit union members such as place of employment; however, some credit unions are open to the general public. The majority of credit unions in the United States are federally insured through the Credit Union National Administration (CUNA), similar to the FDIC, which insures traditional banks. This means your deposits are insured up to $100,000 per depositor.

Just like banks, credit unions collect deposits and make loans to their members. These deposits and loan repayments often come from automatic payroll deposits that enable credit unions to extend loans to their members at less risk. Its quite simple…less risk equals lower fees charged for services offered by credit unions. Remember, since credit unions are non-profit and operate for the benefit of their members, they often pay higher rates and charge lower fees than banks.

The size of the credit union may affect the variety of services offered. Smaller credit unions may only offer a limited number of services, such as savings accounts and loans. Some credit unions focus on banking for low-income communities. For more information, see theNational Federation of Community Development Credit Unions website. The larger credit unions may offer a full-service business, which includes different types of checking accounts, savings options, credit cards, loans, and ATM services.

Credit unions are non-profit organizations owned by and operated for the benefit of members. Since there are no shareholders to answer to, they can often offer higher interest rates and lower fees. Credit unions may offer limited services and convenience. So shop carefully to ensure you get all the services you need. As you evaluate your options in selecting a banking institution, consider a credit union. As with any financial decision, you'll have to weigh the pros and cons.

Ask your employer or contact some local credit unions in your community to see if you are eligible for membership. For more information, visit the Credit Union National Association website at www.cuna.org. To find a credit union in your area, try CUNA's database of credit unions, or you can also call CUNA at 1 800 358-5710.

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