Tag Archive for savings

Tired Of Corporate Banks? Try A Credit Union

family-saving-money-in-piggy-bankFor hundreds of years, banks were the way to do business when it came to saving money, investments, loans and lines of credit. For many years, this worked. However, consumers are now demanding more for their money and this goes for the banking industry as well. A credit union offers many of the advantages that consumers are looking for.

But what are these benefits? If you want to understand what credit unions offer in comparison to conventional banking, you need to understand their structure. These organizations are usually set up as not-for-profit enterprises and are seen mainly as cooperatives. Just like any other co-op, the members put the resources in and take all of the resources out. Credit union members all share in the profits and resources of their organization. While it’s an unusual foundation for a bank, the members find that they play a more active role in the financing and handling of their own money.

This structure usually results in several advantages for a member, including higher interest rates on savings accounts and sometimes even checking accounts (they’re usually referred to as dividends), lower interest rates on loans and the possibility for micro-loans. Geared to the personal needs of the individual consumer, credit unions focus on the client to get the services they need with the lowest possible fees.

Another advantage that credit unions have over banks is that they are focused on more than profits. Banks are usually corporations, which have millions of shareholders. These shareholders are the owners of the business and get paid accordingly, through stock or cash dividends. This means that any profits that the bank does not retain goes directly to their shareholders and not to their customers. Credit unions do not have shareholders, which is why they are a better option for independent consumers. Their customers are their members, and all of the profits they gain are given back. This is why most credit unions can offer very competitive rates and have extraordinary customer service. They’re unique that way, especially when compared to major financial institutions.

Credit unions are also very involved in their communities. They realize that their members are their owners, so they are invested in their interests. This means they always try to get involved with food drives, runs and walks for the cure and other great causes in their communities. Many credit unions often give very generous donations, showing that they truly care about the communities in which they were founded. This “local is best” mentality is another common denominator when determining why customers leave banks and move their assets to a credit union. If you live in the Ontario area, Pace Credit Union offers 14 locations across the province with a focus on community-building.

According to the Credit Union National Association, membership rates have increased to over 100 million users and continue to grow every day. As people realize they can get better rates and more friendly service at a credit union, they are switching to the best alternative to banks.

 

 

 

 

Do You Have A Rainy Day Fund?

I’ve heard several financial experts say you should have between 3-6 months or 6-8 months of expenses in a liquid account in case of an emergency. After seeing several friends loose their jobs for a longer time than that. I now think 12 months is a solid rainy day fund, especially if you’re single or the only breadwinner in your house. The more of a rainy day fund you have the better, because once your income is gone, there is no money coming in at all until you find another way to bring in some cash.

I know it may take a long time to save 12 months worth of expenses, but you could start small and aim to have 12 months. The key is to have some money saved for a rainy day versus having none at all. We never know when that rainy day is going to hit us, and it will eliminate a lot of stress if you have extra money versus having to rack up those credit cards to pay your bills.

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