The TV show MythBusters explores, tests, and ultimately confirms or debunks myths and urban legends. Thanks to the successful comedic duo on the show, myths such as "all men prefer blondes" and "it's easy to take candy from a baby" have been debunked. While having confirmation that a person's tongue will stick to a frozen metal pole is important, we thought we would explore a topic more useful to our readers - 3 credit union myths, and determine if they are "confirmed," "plausible," or "busted."
MYTH 1: "Membership" is a restrictive term that implies becoming a member is difficult or exclusive.
The term "membership" is crucial to credit unions as it sets them apart from other financial institutions that have customers, not members. Having members portrays the idea that a credit union is not a privately held, for-profit business. Rather, a credit union is a cooperative organization in place for the greater good of all its stakeholders.
Historically CUs were closed institutions, where certain criteria was required for membership. SEG-based (or Select Employee Group) charters set employment, church affiliation, and career status as factors that determined if you could join a credit union. Some credit unions still operate in this manner, while others have a community charter and are not closed. Field of membership (FOM) rules and regulations are also constantly being updated and changed. This causes confusion with attracting new members, especially if the name of your community-based credit union dates back to when you were a SEG-based CU. However, the pros of using the term membership, along with education on what benefits it has, outweigh the cons. Therefore, we deem this myth BUSTED.
MYTH 2: Many young people, including millennials, do not understand the term 'not-for-profit'.
Previous generations put their savings, and their trust, into the big banks and hoped it paid off with big returns. Young people today are hesitant to support big business with the enthusiasm of their predecessors. They want to conduct business with companies that care about them and the local community. Millennials value the nonprofit model more than most because they recognize the impact they have on the greater good of society. They also appreciate the benefits of reduced fees, lower loan interest rates and higher saving rates. They feel confident in knowing they have an impact on their own financial future with nonprofit CUs. Therefore, we declare this myth BUSTED!
MYTH 3: Credit unions are only for poor people.
There is a perception that credit unions are entry-level, or elementary, financial institutions, but once you gain experience then you can graduate to a bank. This might be a result of credit unions appealing to the working class, and SEG-based credit unions being abundant with blue collar jobs. Some executives in the factories would not take their banking needs to the employee's credit union, but instead, would use the for-profit banks as a sign of their wealth. However, times have certainly changed, and with the corruption uncovered in big banks, and especially after the Great Recession, people of all economic statuses use credit unions and banks alike.
CUs may be more appealing than big banks because they help young members establish savings and grow wealth through education and credit union member services. CUs offer services and programs that can appeal to all levels of investors, including experienced investors that want to have a say in how their money, and the institution that holds it, is managed. After all, when you're a member, you have a voice. Therefore, we deem this myth BUSTED.
There are plenty of myths about credit unions. It's up to you to dispel common misunderstandings of the CU model with modern mobile services, an array of loan and saving offerings, and a customer service experience that outshines big banks.
