Credit Unions

In order to assist you through retirement, The Retirement Group often works with your credit union, Examples would be to insure your monthly distributions get deposited correctly or insure money transfers occur on a timely basis. Some of the Credit Unions we have worked with are Wescom Credit Union, Exxon Houston Credit Union , and the Verizon Employees Federal Credit Union,.

Although The Retirement Group is not affiliated nor endorsed by your credit union by working with your credit union we can try and make your retirement transition as comfortable as possible.

Credit Unions are financial institutions that are wholly owned by their members and are operated mostly by volunteer board of directors. They operate as not-for-profit, cooperative, and tax-exempt organizations. All federal credit unions and almost all state-chartered credit unions are backed by the National Credit Union Share Insurance Fund (NCUSIF). This is a deposit insurance of at least $250,000 per member and is backed by the full faith and credit of the United States Government. Credit unions are federally chartered and supervised by the National Credit Union Administration (NCUA). U.S. credit unions can be chartered either by the federal government or by the state (aside from Delaware, South Dakota, and Wyoming whom must obtain federal charters). As of April 2010, the largest American credit union is Navy Federal Credit Union, who serves U.S. Department of Defense employees, contractors, and families of those. They have about $40 billion in assets and hold over 3 million members.

Credit Unions are not-for-profit organizations but this is not to be confused with not-for-profit charities. They operate to provide excellent service to their members instead of maximizing profits. Credit unions typically cannot accept donations and must be able to grow in a competitive market economy. Meaning that their revenues (from loans, investments, etc) must exceed operating expenses and interests paid to be able to maintain capital and solvency. All of the excess earnings that a credit union makes go back to its members in the form of lower loan rates, higher return on savings, and lower fees on their products and services.

There are usually limitations to becoming a member of a credit union that are based upon each individual credit union. The most common requirements that credit unions limit their membership to are by geographic community, workplace, religion, or just by being relatives of members. Having membership in a credit union entitles members to all products and services provided by that credit union as well as one vote in Board elections and certain credit union matters.

Banks differ very much in comparison with credit unions. Firstly, they are much larger than credit unions and hold higher asset balances – i.e. as of 2007 the average U.S. credit union had about $93M in assets, while U.S. banks held about $1.53B. Conversely, banks are profit-oriented organizations; they are very profit driven versus credit unions who are service driven. They operate to return profits to their stockholders and invest in corporate bonds or in the stock market. Anyone can become a customer of a bank whereas credit unions members must have certain qualifications. Banks are controlled by stockholders and Board of Directors who represent the owners; customers do not have voting privileges. The Federal Deposit Insurance Corporation (FDIC) insures banks and the Office of the Comptroller of the Currency regulates them. In the past few years, the NCUSIF has had a higher insurance fund capital ratio than the FDIC fund capital ratio. Also, U.S. credit unions ordinarily have higher equity capital ratios than U.S. banks.

Aside from offering various types of deposit accounts, credit unions also offer a variety of loan accounts at a better rate than banks do. The main types of lending they offer to their members are auto loans, personal loans, lines of credit (personal and home equity), mortgage loans, as well as credit cards. Auto loans can include motorcycles, RVs, cars, or any of those sorts. The average auto loan rates at credit unions range, depending on the term, from 3-5%, while the country average ranges from close to 4-6%. Personal loans such as a secured loan are offered as well, these secured loans must hold some type of collateral in order to be obtained. A personal line of credit can also be a type of personal loan, it is revolving and acts similarly to having a credit card. Home equity lines of credit (HELOCs) allow a person to take a loan out using their home as collateral. It is given at a pre-determined amount and it is an adjustable rate loan. As far as mortgage lending goes, credit unions have increased their mortgage originations by 17% in 2008 and increased their share of total mortgage lending from 2.5% in 2007 to 4.7% in 2008. Credit cards at credit unions may be better than bank credit cards as well. For example, according to federal law prohibits federal credit unions from charging interest rates higher than 18% whereas for-profit credit card companies have no restriction, interest rates are on average 20% lower than at banks, and they also have lower fees and penalties on their credit cards.

Tel: 800-900-5867 Fax: 800-900-0750

Registered Representative of and securities offered through FSC Securities Corporation, Member FINRA / SIPC. Investment Advisor Representative of and Advisory Services Offered Through The Retirement Group, LLC or FSC advisory. The Retirement Group, LLC and FSC Financial are not affiliated companies


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