How credit unions are vital for communities

On the surface, credit unions and banks may seem similar. Both offer savings and checking accounts and loan services, but their methods, membership, and leadership structures differ in important ways.

While some aspects of a bank’s ownership may be local, for most, the primary ownership of a bank’s assets is not within the community it operates in. This means that the money that is taken in the form of higher rates and fees are going to somewhere outside of the community.

Credit unions, on the other hand, are usually local and built to meet the needs of community members, who, with their membership, are part-owners. They are known for special rates and offers to members, all of whom are also part owners of the credit union. But the benefits don’t end there.

Here’s what else to know about credit unions and how they are vital for communities.

Unlike banks, credit unions exist to serve their members, so the money earned doesn’t go to executives.

Putting this money back into the pockets of community members allows for continued local economic growth.

Banks and credit unions both have boards of directors, but the two operate differently. While bank boards are paid, credit union boards are volunteers elected by credit union members. Volunteer board members aren’t any less qualified, though.

"Our credit union is lucky to be within the Research Triangle Park, and we have a variety of board members, past and present, including VPs and owners of large companies in the Park, teachers, directors, etc." said Lombardi.

To pay boards of directors, banks typically have high sales goals, which may lead to customers signing up for accounts or services they don’t really need, she said.

"We expect our credit union staff to tell our members about our products but don’t want them selling products that they don’t need or really cannot afford," said Lombardi.

Therefore not only do the members benefit from avoiding unnecessary spending, but they also benefit from a board of directors that are there, not for profit, but to voluntarily help make decisions that will positively impact members and the community.

Credit unions are legally required to limit their membership to particular demographics of people who share a common bond. Often, this is a geographic area or business. For example, hundreds of organizations are partnered with RTP Federal Credit Union to provide membership benefits to their employees.

"Today, over 250 businesses and associations in the RTP and greater Triangle area are offering the benefits of RTP Federal Credit Union membership," said Jill Beck, a 17-year veteran of the credit union who works as the Marketing and Member Services Director. "We are also offering membership to the community and surrounding areas. We’ve grown to more than 10,000 members with three full service branch locations."

One of the best things about credit unions is the hometown feel, as employees know the individual members.

"We are pretty small with only three locations," said Lombardi. "However, that allows us to know our members. Our smaller branches typically know a majority of our members by name, and it is our mission to provide superior personalized service."

Personalized customer service means the credit union may recognize suspected fraud or bounced checks more quickly than larger financial institutions. It also allows employees to recommend services, discounts, and accounts based on individual needs.

This individualized service leads to greater consumer confidence and the ability for communities to prosper together.

Because credit unions are locally owned and operated, community is an important consideration for every aspect of their business.

"Credit unions operate to promote the well-being of their members," said Beck. "Community is always a focus with credit unions."

There are many ways RTP Federal Credit Union shows its community support in practical programs. First, it emphasizes gratitude for first responders by offering a 0.25% discounted rate on first responder loans, said Beck. Second, it takes small business loans very seriously. Small businesses are the lifeblood of a community and RTP Federal Credit Union aspires to help local businesses thrive. Third, they offer support when members go through hard times financially, whether by allowing them to skip a loan payment or by waiving a fee. Knowing members personally allow that flexibility of taking into account very personal situations.

Of course, RTP Federal Credit Union also supports its community through sponsorships and donations.

"We try to sponsor fundraising events, such as the Durham CROP walk," said Beck. "We have also been a regular sponsor for the Food Bank. Without community, we would not exist."