Credit Unions: Leading the Way “Not for profit, not for charity, but for service”

2 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

3 Insured Financial Institutions  Banks  Credit Unions  Thrifts

4 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.

5 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

6 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.

7 Other Businesses (not financial institutions)  Check Cashing Service: Charges high fees for cashing checks  Pay Day Lenders: Very high interest rate loans

8 Keep Your Money in An Insured Account  Safety  Convenience  Cost  Security  Financial Future

9  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

10 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  Financial Health Credit Union was organized in  Purpose: Formed by ordinary working people coming together to help each other prosper.

11 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.

12 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.

13 Share/Deposit Accounts

14 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.

15 Share At a credit union, the money in your account is an investment, represented by shares. Sometimes your account is called a share account.

16 Balance Balance is the amount of money you have in your account.

17 Withdrawal Withdrawal is the process of taking money from your account using :  Checks  Withdrawal slips for cash  ATMs/Debit Cards  Electronic withdrawals

18 Fees A fee is when a financial institution takes money out of your account. Examples,  Service Fee monthly maintenance fee  Penalty bouncing a check

19 Interest Interest is extra money in your account that you receive for keeping your money in a financial institution.

20 Dividend At a credit union, you earn dividends on your shares. IRA deposits and certificates of deposit (CDs) pay interest.

21 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.

22 An ATM (automatic teller machine) can be used 24 hours a day to:  Deposit –checks only  Withdraw – available cash  Transfer money ATM

23 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

24 Direct Deposit Direct deposit is one way of receiving your paycheck or benefit check electronically.

25 Loans A loan is money you borrow from a financial institution with a written contract to pay it back later.

26 Money Order A money order is similar to a check. It is used to:  Pay bills  Make purchases

27 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

28 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

29 Thanks for Participating!!!  You have completed the 1 st 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