Credit unions are a competitive alternative to mainstream banks
While mainstream banks continue to dominate the financial markets they are not the only option available to Kiwis.
Credit unions are member-owned, not for profit organizations that offer banking, lending, savings and insurance products to their members. Since they are not driven by profit and exist to improve the lives of their members and boost their local communities credit unions are an alternative to traditional banks that any New Zealander can make use of to access cheaper credit while indirectly helping other members and the community. Credit unions elect their board of directors from their pool of members using a democratic system.
Technically speaking credit unions in New Zealand are referred to as financial co-operatives and exist to help their members thrive from an economical standpoint while also boosting community development in the areas they service.
In essence the people that are members of a particular credit union are the owners as well and this cuts out that drive for profit and gain and allows any profits made to be utilized to their very benefit. Although credit unions do not exist for the purpose of profit like banks and others lenders they must be able to operate at a profit to ensure they can continue to operate.
What a credit union can do for you
A credit union typically provides the very same services that a bank would and this include transactional or current accounts, savings or share accounts, home loans, car loans, debt consolidation loans and personal loans but, at a much lower cost to the borrower.
They also offer other services such as insurance and banking services which are optimized to bring you, it's member the best value for money. Since credit unions are smaller than banks and do not have the sheer magnitude of the many international banking brands operating in New Zealand their products and services may not be as advanced and innovative. Although this is true, many of the larger credit unions have started catching up and offer online and telephone services.
You can now apply for a loan online, do online banking, mobile banking, download apps to manage your money and access great information on how to better manage your money. Although credit unions do not offer credit cards they do offer everyday transactional accounts with overdraft facilities.
This means that if you find yourself short of cash and in an financial emergency you can withdraw or use money up to the agreed limit and not have to go out of your way to apply for a loan. This revolving line of credit works in a very similar fashion and can easily take the place of a credit card. Credit unions are big on savings and you will therefore be pleased to find some of the most competitive savings accounts available in the country at your credit union.
Differences between a bank & a credit union
- Credit unions are member owned while banks are shareholder owned
- Credit unions are not profit orientated while banks are
- Credit union members are also owners while a customer of a bank is just a customer
- Credit unions invest any profits back into their members and communities while banks do not
- All credit unions are required to hold annual general meeting where all members are invited to vote for their board members and therefore have a say in who is running the show while a bank customer has no say in the management of the bank
Joining a credit union
In order to join a credit union you must either live in a set geographical location, be in a certain field or industry, be in certain profession or have a family member who is a member. One of the largest credit unions in New Zealand, First Credit Union has no requirement other than the individual member must reside in New Zealand.
Most credit unions allow you to apply for membership online and you can even pop into a branch to do so if it suits you better. You will have to provide a lot of details to become a member - this includes all your personal and contact information as well as details about your current debts.
It is important to note that there are many credit unions in New Zealand and that each operates independently and has their own set of policies, services and membership requirements. Regardless of which credit union you choose to use and become a member of, you can rest assured that you will be able to access loans in NZ at significantly lower rates than you would with a traditional bank.
Top benefits of becoming a credit union member
- Access products and services tailored to your profession, location or lifestyle
- Access lower rate personal loans and banking services
- Know any profits made from using the services and products will be reinvested into helping other members and the local community
- Access lower rate insurance products
- Make use of the free information, courses and tips to help you make the most of your money
Consolidating debt with a credit union
Although being a member of a credit union has countless benefits and you can secure lower rates across the board on just about any credit product you can think of debt consolidation with a credit union is perhaps one of the most beneficial products offered.
Consolidating debt with a credit union will almost always guarantee that you get a lower interest and save money while also offering you the convenient loan terms that banks do. When you consolidate debt with banks and other lenders you cannot always guarantee that the new loan will actually carry a lower interest rate but, with a credit union you can be certain of it.
In addition since credit unions and not for profit organizations they will not try to sell you their products just to make money - they will likely evaluate your situation in an unbiased fashion and only recommend consolidation if it truly will help your financial and living situation.