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Credit Unions: Leading the Way
“Not for profit, not for charity, but for service”
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You Will Know Major types of insured
financial institutions Basic terms Differences between credit
unions, banks, thrifts and check-cashing services
Types of accounts Types of services
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Insured Financial Institutions Banks Credit Unions Thrifts
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What is a Bank?
For-profit financial institution
Owned by a group of people called stockholders
Profits after expenses are returned to stockholders
Business strategy is to maximize profits for owners.
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What’s a Credit Union?
Not-for-profit financial cooperative
Owned by its members
Profits are “shared” with the members in the form of lower rates on loans and higher rates on savings
Member service is the primary business philosophy
Serve a defined field of membership
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What is a Thrift?
For-profit financial institution
Used to be called “savings & loan” (S & L)
Primary business is home mortgages
Many thrifts have converted to banks in recent years.
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Other Businesses(not financial institutions) Check Cashing Service:
• Charges high fees for cashing checks
Pay Day Lenders:
• Very high interest rate loans
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Keep Your Money in An Insured Account Safety Convenience Cost Security Financial Future
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Insures deposits in credit unions Backed by federal government Not one dollar of taxpayer money
has been used to create or maintain the credit unions’ share insurance fund.
The NCUA Share Insurance Fund is the strongest of its kind.
All Michigan CUs are insured by NCUA
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Brief History of Credit Unions First Credit Union organized in
Germany in 1840’s. First U.S. credit union was St.
Mary’s Parish C.U. of Manchester, New Hampshire, organized in 1908.
Financial Health Credit Union was organized in 1936.
Purpose: Formed by ordinary working people coming together to help each other prosper.
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Credit Unions: Promote Economic Development Committed to fostering economic
development & helping individuals attain self-sufficiency in America & the world
CU’s in 93 countries are a stabilizing force that gives diverse peoples the opportunity to practice democracy within a member-owned organization.
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National Credit Union Foundation (NCUF)“Providing a pathway to consumer financial
independence”
Supporting 3 key components: Access: NCUF funds projects that provide
access to quality, affordable financial services for under-serviced groups
Financial Literacy & Education: Funds programs that improve the financial literacy of consumers through education
Asset Accumulation: Funds a range of activities that provide direct impact on a consumers asset accumulation, from a basic savings account to a first-time home purchase.
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Share/Deposit Accounts
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Deposit
A deposit is money you add to your account using a deposit slip.
You can also deposit money electronically through “direct deposit” of payroll, pension, or a government check.
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Share
At a credit union, the money in your account is an investment, represented by shares.
Sometimes your account is called a share account.
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Balance
Balance is the amount of money you have in your account.
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Withdrawal
Withdrawal is the process of taking money from your account using:
Checks
Withdrawal slips for cash
ATMs/Debit Cards
Electronic withdrawals
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Fees
A fee is when a financial institution takes money out of your account. Examples,
Service Fee • monthly maintenance fee
Penalty• bouncing a check
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Interest
Interest is extra money in your account that you receive for keeping your money in a financial institution.
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Dividend
At a credit union, you earn dividends on your shares.
IRA deposits and certificates of deposit (CDs) pay interest.
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Accounts
Savings/Share Account
Your basic (membership) account, designed for the purpose of safeguarding and accumulating money.
Checking Account/Share Draft
An account that lets you write checks to pay bills or buy goods.
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An ATM (automatic teller machine) can be used 24 hours a day to:
Deposit –checks only
Withdraw – available cash
Transfer money
ATM
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Debit Card
A debit card is a plastic card that: Is used to pay for goods or services Deducts funds electronically from your account at time of transaction Has a MasterCard or Visa logo
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Direct Deposit
Direct deposit is one way of receiving your paycheck or benefit check electronically.
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Loans
A loan is money you borrow from a financial institution with a written contract to pay it back later.
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Money Order
A money order is similar to a check. It is used to:
Pay bills
Make purchases
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Automated Telephone Banking
Audio response services allow
you to:
Check your account Transfer money Obtain account history Stop payment on a check Obtain branch hours Report a lost, stolen or damaged card
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On-Line Financial Transactions On-line banking or home banking
allows access to your account from your computer terminal.
Check balances, balance your checkbook.
Make loan payments
Pay bills on line
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Thanks for Participating!!! You have completed the 1st step
toward having a sound financial future!!
Please fill out the Course Evaluation form
The Take Home Guide is yours to keep for future reference
If you have further questions or concerns, call 517-319-1300.