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Credit Unions: Leading the Way. “Not for profit, not for charity, but for service”. 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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Credit Unions: Leading the Way “Not for profit, not for charity, but for service”
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
Insured Financial Institutions • Banks • Credit Unions • Thrifts
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.
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
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.
Other Businesses(not financial institutions) • Check Cashing Service: • Charges high fees for cashing checks • Pay Day Lenders: • Very high interest rate loans
Keep Your Money in An Insured Account • Safety • Convenience • Cost • Security • Financial Future
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
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.
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.
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.
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.
Share At a credit union, the money in your account is an investment, represented by shares. Sometimes your account is called a share account.
Balance Balance is the amount of money you have in your account.
Withdrawal is the process of taking money from your account using: Checks Withdrawal slips for cash ATMs/Debit Cards Electronic withdrawals Withdrawal
Fees A fee is when a financial institution takes money out of your account. Examples, • Service Fee • monthly maintenance fee • Penalty • bouncing a check
Interest Interest is extra money in your account that you receive for keeping your money in a financial institution.
Dividend At a credit union, you earn dividends on your shares. IRA deposits and certificates of deposit (CDs) pay interest.
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.
ATM An ATM (automatic teller machine) can be used 24 hours a day to: • Deposit –checks only • Withdraw – available cash • Transfer money
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
Direct Deposit Direct deposit is one way of receiving your paycheck or benefit check electronically.
Loans A loan is money you borrow from a financial institution with a written contract to pay it back later.
Money Order A money order is similar to a check. It is used to: • Pay bills • Make purchases
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
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
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.