Celebrating 75 Years of International Credit Union Day: Why Credit Unions Matter Now More Than Ever

By: Danny Phillips

Originated in 1948, International Credit Union Day® on October 19th celebrates the spirit of the global credit union movement, emphasizing its importance in offering financial empowerment to millions of credit union members worldwide. Many credit unions across the country are celebrating today with open houses, contests, picnics, etc.

As this year marks the 75th anniversary of International Credit Union Day, I felt it's the perfect opportunity to shed light on the immense value that credit unions bring to individuals and communities.

Let’s start with a question that many consumers ask: What’s the difference between banks and credit unions?

The Credit Union Difference: Banks vs. Credit Unions

Between 2001 and 2019, credit unions served 18% to 22% of U.S. households, and that number has steadily increased over the last few years. As of the fourth quarter of 2022, nearly 136 million people were members of credit unions, which was almost six million more than at the end of 2021. 

But, because of multimillion dollar marketing campaigns and well-established footholds in both urban and rural marketplaces, the “buzz” around credit unions doesn’t seem to be as loud as it is around banks.

So, even though credit union membership seems to be increasing, there are still plenty of consumers—especially among younger populaces like Gen Z—who do not know the differences between banks and credit unions, including:

• Ownership and Management: While banks are usually privately owned or run for the benefit of shareholders, credit unions are member-owned and member-operated. That means credit unions align their interests with those who use their services.
• Profit Distribution: As nonprofit cooperatives, the profit structures of credit unions differ greatly from banks. Any profits credit unions generate are reinvested back into the institution, which means credit union members get to enjoy reduced fees, elevated savings rates and more affordable loan rates.
• Deposit Insurance: While bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC), credit union deposits are not left unprotected. They're usually insured by the National Credit Union Administration (NCUA), ensuring member deposits up to $250,000. For extra protection, many credit unions offer additional deposit insurance through a combination of NCUA coverage and private insurance.

The Credit Union Advantage

There are several factors that make credit unions more beneficial to consumers than traditional banks:

• Personalized Service: The nonprofit mentality and community-driven model of credit unions often leads to more intimate and tailored interactions between credit union staff and the members they serve.
• Competitive Rates: Without the need to satisfy external shareholders, credit unions can provide extremely competitive (i.e., better) interest rates on loans, savings, credit cards, and more.
• Lower Fees: From free checking to lower fees for ATM withdrawals and overdraft penalties, credit unions can’t be beat from a fee perspective.
• Community Focus: Many credit unions offer programs geared toward financial literacy, community development and local sponsorships.
• Lower Balance Requirements: At many credit unions, the requirement for account balances can be as low as $5.

In addition to the notable differences between banks and credit unions, it’s important to remember there are different types of credit unions, too.

The Different Types of Credit Unions

There's great diversity within the world of credit unions, with several different types of institutions offering various requirements and benefits to specific groups of members. Here are a few examples:

• Federal Credit Unions: These are member-owned and controlled, not-for-profit, cooperative financial institutions regulated by the NCUA. As such, they adhere to the rules and regulations outlined in the Federal Credit Union Act, passed into law in 1934.
• State-chartered Credit Unions: These are also member-owned and controlled, not-for-profit, cooperative financial institutions. However, they are governed at the state level and can vary based on local regulations.
• Employer Credit Unions: From police and fire departments to teachers, employer credit unions serve specific companies, professions and industries.
• College Credit Unions: Many colleges and universities throughout the country have established their own credit unions specifically to cater to students, staff and alumni.
• Military Credit Unions: These specialized credit unions serve members of the armed forces and their families. However, consumers may join a military credit union even if they’re not a service member, veteran or military spouse. 
• Community Credit Unions: Also known as local credit unions, these institutions focus on residents and businesses within a particular geographical area.

The Role of CUSOs: Enhancing Credit Union Offerings

Credit union service organizations (CUSOs), like CU*SOUTH, amplify the capabilities of credit unions.

By providing essential software solutions and strategic partnerships, lowering credit union costs and increasing revenue, CUSOs empower credit unions to serve their members and their communities better. They lead with progressive innovations, ensuring credit union members always get the best from their institutions.

Discover the Credit Union Difference Today

As we celebrate this momentous occasion, consider the myriad benefits credit unions can bring to your financial journey. Give your local credit union a closer look — you may just find a world of opportunities and advantages you never knew existed. Join the movement today!

Danny Phillips is Vice President of Client Experience at CU*SOUTH. Danny brings more than 20 years of experience in consumer direct and indirect lending and more than 10 years of credit union industry experience to his role. Prior to CU*SOUTH, Danny was the Executive Vice President of a 25,000-member, $250 million credit union in Michigan.