3 Ways Credit Unions Are Reinvesting In You

At first glance, credit unions and banks may appear to be the same thing. While both establishments are financial institutions that offer most of the same services, credit unions and banks are run very differently and for different purposes. Unlike banks, credit unions are not-for-profit institutions that are solely influenced by volunteer board members and community members and focus heavily on reinvesting in their members and the communities around them. Here are just 3 ways that credit unions strive to accomplish this practice of reinvestment:

1. Dividends: At a credit union, when you deposit money into an account, you are considered a member-owner of that credit union. This means when you open an account at Coloramo and put just $1 into your account, you own a part of the credit union! Most credit unions reward and celebrate their memberships in a variety of ways, including by distributing dividends. The dividend system works because of members. Credit unions can use the base value of your deposits to fund loans, mortgages, and lines of credit to other members. As a result, the credit union pays out an annual dividend to every one of their members with an account. At Coloramo, as the credit union grows financially, so do each of our members individually. If you are ever shopping around for a credit union and you want to know if they share dividends, just ask!

2. Better Rates: Since credit unions aren’t looking to turn a profit, they are able to return earnings to their members in the form of higher dividend rates on savings accounts and lower interest rates on loans and credit cards. According to the National Credit Union Administration (an independent federal agency that insures deposits at federally insured credit unions), as of June 2020, loans with a five-year term for new cars had an average interest rate of 4.90% at banks, compared with just 3.28% at credit unions. The difference of 1.62% may not seem that big, but today it certainly adds up over the lifetime of a car loan.

3. Community Investment: Another way credit unions are unique in reinvesting in their members is how they use the money you deposit to stay in the local community. Once again, this goes back to the fact that credit unions are not-for-profit, so they thrive by reinvesting in their local communities. Income can be used to help a family buy their first home, provide funding for a student’s education, or help a local business owner follow through on their dream. We believe it is a credit unions’ mission and pride to boost their local economies, in order to promote the businesses and the general well-being of those who surround them. Coloramo does this in a number of ways, including but not limited to funding loans and lines of credit, scholarship opportunities, community events, sponsorships, and creating jobs in the Grand Valley as we continue to grow.