What exactly is the difference between a bank and a credit union, and how can it impact my finances? Chuck Garlock, CEO of Rock Valley Credit Union, sets the record straight.
As a youngster growing up and living in the downtown Rockford area, I sold the Rockford newspaper by walking up and down East State Street and in and out of businesses. I realized you might be “somebody” if you banked at the old First National Bank on East State Street. It was actually the only bank I knew.
Years later, on Aug. 13, 1968, I was among the small group of Barber-Colman Company employees chosen to sign the charter paperwork to create the Barber-Colman Employees Federal Credit Union, now known as Rock Valley Federal Credit Union.
As with everything else, things sure have changed in the banking world. I’ll save discussion about today’s vast array of banking products and services for another article. What may be the greatest advantage for consumers today is the number of choices we have for meeting our financial needs.
Choice is where credit unions play an important role in today’s financial marketplace. Today, more than 91 million Americans are members of credit unions, according to the Credit Union National Association. That’s 91 million people who’ve chosen a credit union account, rather than an account at a bank. This illustrates the power of consumer choice. Given a choice, these 91 million people determined they were better served with their account at a credit union. Consumers, especially those who are well-informed, almost always are better off when they have a choice about how and where to invest, borrow or spend their money.
People have often asked me why they should be concerned whether they do their banking at a credit union or bank. While I’ll admit to being prejudiced toward credit unions, and Rock Valley Credit Union in particular, I usually respond that if they’re happy where they do their banking, that’s fine. But I ask if they’ve ever considered a credit union.
Differences between credit unions and banks are not readily apparent when depositing or withdrawing funds, except in the attitude and professionalism of the individual teller. However, there are many organizational differences, including the way that the board of directors is organized. Bank directors are paid for their services with stockholder dividends. Credit union boards are made up of unpaid volunteers.
Consequently, money that would otherwise go to pay directors is used instead by credit unions for future products and services. Credit union members are owners of the credit union, rather than being customers. Credit union members have the privilege of voting for the individuals who wish to serve on the credit union board. Bank customers have no such opportunity. Credit union members determine the group of volunteers who make the policy decisions for the credit union.
It’s often said that credit union members get interest rates that are higher on deposits and lower on loans than at banks. That’s certainly not true in every case; however, I have never seen this type of data favor banks over credit unions, when using county, state or national statistics. Overall, credit unions do have better rates.
For decades, the credit union industry has used the phrase “People Helping People.” Credit unions were founded to help people of common bonds to help themselves, because they weren’t getting what they desired from banks. That common bond may mean people who work together in a particular organization; people who work in a particular field, such as health care or education; or people who simply share the same community.
Today, we have many choices. It’s never been more important for people to take ownership of their financial well-being. That includes being knowledgeable about rates offered on savings and loans; balancing the checkbook regularly; and deciding if a credit union or bank best suits needs and expectations.
For me, “yesterday” was about selling my papers outside that beautiful old bank building on East State Street. Today, it’s about Rock Valley Credit Union and a choice for consumers. It’s about People Helping People and empowering members with ownership of their financial futures. ❚
Chuck Garlock, President/CEO, has been part of Rock Valley Credit Union since its beginning. Over the past 42 years, he has served as a board member; he has been an employee for the past 24 years. “Truly believing in the Credit Union Difference.”