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Enabling Community Empowerment: How credit unions catalyze positive change.

in Managing Money & Credit

Choosing where to entrust your hard-earned money, secure a loan, acquire knowledge, and make investments is a decision of immense significance. Beyond desiring optimal terms and rates, safety, reliability, and trustworthiness in financial institutions are also paramount.

Often overshadowed by colossal banking entities, credit unions can be misconceived, leading consumers to miss out on their manifold advantages. Despite this, a staggering 135 million Americans have opted for credit unions as their preferred banking solution.

Beyond the appeal of customer-centric service, convenient banking, and favorable terms, credit unions consistently play a pivotal role in empowering the communities they cater to, fostering a positive influence for everyone. What drives credit unions to maintain their altruistic approach and generosity with their resources, you might wonder?

The answer is simple: the intrinsic traits defining credit unions naturally culminate in nationwide community empowerment.

Intrinsic Traits of Credit Unions

  • Member-owned (versus investor-owned). When you join a credit union, you are buying shares in a non-profit financial cooperative. Your money is pooled with other members to provide financial services and products to all members. If there is any income left over, the money is used to give back to the credit union’s members and the community. Members often share a common connection such as their employer, family, geographic location, or membership in another organization.

Once you are a credit union member, you immediately earn voting rights, regardless of the size of your account. When you conduct business with a bank, you are a customer of a privately owned or publicly traded company.

  • Non-profit (versus for-profit). Because credit unions don’t focus on increasing earnings on behalf of shareholders, they can focus heavily on the needs of members.
  • Personalized service. Credit unions are often smaller than banks, which naturally lends to more personalized service. When you join a credit union, you can expect dedicated, customized, and attentive service — day in and day out.
  • Greater flexibility. Because they are not aiming to increase investors’ profits, credit unions have more flexibility when it comes to whom they lend money. If a small local business needs a loan to expand its services, a credit union can often provide a personalized solution for them. Furthermore, credit unions can also offer accounts without minimum balances or maintenance fees.
  • Better rates. Profit is returned to the credit union’s community and members, which can come in the form of higher rates on savings accounts, increased dividends, and an expansion of financial products.

In March 2023, the National Credit Union Administration reported that the average rate for a 5-year Certificate of Deposit at a bank was 1.83% compared to credit unions at 2.66%. These rate differences can significantly impact progress toward financial goals. At Lafayette Federal, we offer nation-leading rates on our deposit products.

Credit unions also offer favorable interest rates and terms when it comes to borrowing money — allowing members to best manage their repayments.

  • Fewer and lower fees. Credit unions can typically pass along even more benefits through no or low fees on financial products and services.
  • Provide resources to low-income members. Low-income credit unions offer families and individuals access to accounts with very low minimum balance requirements, small-dollar business loans, financial education, and more. These services can completely transform communities, one family at a time.
  • Committed to the environment. Abiding by the “people helping people” motto, credit unions are dedicated to their communities and the environment. At Lafayette Federal, we host annual shred events, invest in solar energy, use compact fluorescent lighting at our corporate office, encourage paperless banking options, and offer discounts for environmentally-friendly vehicles purchased with our auto loans.

5 Ways Credit Unions Are Driving Positive Impact

1. Credit unions involve members in decision-making

Since credit unions model cooperative ownership, every member has a say in decisions. As mentioned before, account size doesn’t hold ranking because they’re not trying to increase our profits for shareholders. Instead, success is measured by how satisfied members are with products, operations, member service, and community effort.

Most credit unions allow immediate family members of their members to join as well, fostering even stronger connections within the community! When a family member introduces their credit union to their family, it inspire lifelong loyalty and longevity.

2. Credit unions prioritize underserved communities

Credit unions believe that financial literacy and accessibility are a priority, and the model of operations allows them to carry out these values. Credit unions prioritize underserved communities through low-income designated credit unions (LICUs).

LICUs are credit unions where the majority of members are considered “low-income” according to Section 701.34 of the National Credit Union Administration’s regulations. Benefits of LICUs include secondary capital accounts, loan exceptions for business loans, participation in NCUA’s Community Development Revolving Loan Program, and non-member deposits.

Some credit unions are Community Development Credit Unions (CDCUs), which means they are committed to serving low and moderate-income communities. They are a safe place to grow assets, gain financial education, receive loans (despite poor or no credit history), and conduct financial tasks for low costs.

Credit unions are changing the financial future of many low-income communities through low minimum account balance requirements, access to educational and financial literacy services, and small business loans (to name a few).

At Lafayette Federal, we’ve hosted numerous financial education workshops over the years at local schools, youth centers, and organizations dedicated to serving the underserved. We have also provided consumer and mortgage loans to low-income communities since 2002. These funds have helped individuals and families secure essential necessities, such as housing and vehicles.

3. Credit unions offer personalized solutions

Customized solutions and tailored interactions are the direct results of relationship-based banking. Because everyone at a credit union is part of a community, strong bonds inherently develop. Credit union employees take the time to listen to their member’s stories, goals, and struggles, something a for-profit organization would have trouble finding the time for.

Because credit union employees know their members on a deeper level, they can seamlessly offer them advice, products, and services that meet their needs. Over time, these small personalized solutions add up to vastly enhance a member’s financial success and well-being. As members navigate challenging and complex financial situations, they can rest easy knowing that they have their credit union in their corner, helping them navigate it all.

4. Credit unions love (and support) small businesses.

Small businesses and credit unions can often find themselves volunteering and giving back together, which further strengthens relationships and partnerships. Keeping money and other resources within the local economy also stimulates job growth and economic stability for communities. This collaboration makes it possible for small businesses to thrive and grow, especially during times of economic uncertainty and volatility.

Big banks sometimes only accept and want to work with businesses that require large loans, thereby excluding small businesses in need of smaller loan amounts. More than 70% of small businesses desire loans under $250,000 and more than 60% of them want loans under $100,000. Credit unions’ favorable business loan structuring makes them a sensible choice for savvy business owners.

At Lafayette Federal, our business officers are ready to connect with entrepreneurs who are ready to streamline their cash flow, save time, organize their payroll, and secure their finances. We offer favorable rates on our business savings accounts—Preferred Savings and Premier Savings. We also have business credit cards available so you can grow your business while earning rewards.

5. Credit unions invest in communities

Financial literacy puts members on the road to success, manage their day-to-day finances, and achieve their financial goals. The key to financial literacy is having a strong financial knowledge base. Credit unions make it a priority to provide members with free financial resources because they know how important it is for our member’s financial well-being. Credit unions can offer personalized financial education directly tailored to their communities because they understand their needs and wants.

Many credit unions make it easy for their employees to volunteer their time through employee volunteerism programs and events. This investment in volunteerism displays the devotion of the organization to ensuring their communities succeed.

At Lafayette Federal, we provide resources to aid in your lifelong financial journey. We offer educational resources on various topics including: managing money and credit, protecting your identity, planning for retirement, and more! We also offer workshops that cover personal banking basics, investment and retirement planning, business banking and entrepreneurship, credit building, and re-entrance to the workforce.

Be Part of Something Greater at Lafayette Federal

At Lafayette Federal Credit Union, we care deeply for our members, our local communities, and the environment. We’re proud of our history in investing in our cooperative spirit, and humbly look forward to our future.

At Lafayette Federal, you’re more than just a member. You’re an important part of how we give back to the community.

Not a Lafayette Federal member yet? You can become a member by completing an online membership application.

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