We all work hard for our money, dedicating the bulk of our waking hours to the grind in order to live comfortably and provide for our families. So when it comes to deciding where to keep that money, you'll want to be well-versed in all the options available.
Banks are straightforward enough, but what about credit unions? Though there are plenty of well-known credit unions on the market, chances are you're not acutely familiar with how they work — you may have even mistaken them for banks.
We spoke to Joel Dooner, Credit Union Australia's (CUA) millennial money spokesperson, to find out what credit unions do and what it means to put your well-earned dosh in one.
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What actually is a credit union?
According to Dooner, "Credit unions were originally started up by communities to provide banking and loans to people who couldn’t traditionally access them from other banks. They are similar to building societies or mutual banks."
This means that credit unions offer banking services like home loans, personal loans, transaction and savings accounts and credit cards — even though they're not technically banks. For the most part, the two institutions function in similar ways.
There's still a lingering misunderstanding that credit unions are inaccessible, but Dooner suggests otherwise.
"My parents’ generation often associated credit unions with a particular industry - like teachers, nurses, or police. But these days, most credit unions, including CUA, are open to anyone to join. Because members are our owners, members also have a say in the running of the credit union and are able to vote at the Annual General Meeting."
How do they differ from other banks?
The biggest difference is how the institution is owned. This isn't to say that it comes down to one person owning the company at large, rather the type of stakeholders involved in ownership, and it's a question of who gets to make critical decisions about the products and services delivered.
Dooner clarifies, stating that, "Credit unions like CUA are different to banks because we are owned by members not shareholders, which means we put members at the heart of all our decisions. Our profits are invested back into delivering better products, services and value to members and their communities."
This allows for greater control from members who want to see different features and contributions come to fruition, because as members their opinions and requests carry more weight than a bank customer's might. With a huge focus from millennials on things like social responsibility, this can be instrumental in creating change.
According to Dooner, this has manifested at CUA through the development of community initiatives that focus on driving tangible change in communities, especially those in greater socioeconomic need.
"Today, CUA remains very focused on improving the financial wellbeing of our members and the community, returning 3 per cent of our pre-tax profits each year to make a real difference in our communities. We are partnering with like-minded community organisations including Australian Red Cross, supporting domestic violence initiatives, and addressing challenges around housing affordability."
It is demonstrative of the fact that stakeholders/members do have influence, and that finance and social responsibility don't have to be opposite ends of the spectrum.
What's in it for the customer?
The short answer is: stronger influence and access. The long answer? By opting to go with a credit union over a bank, you could have more control over what happens to the money that would normally be invested by unknown shareholders.
"We don’t have the conflict of balancing the interests of shareholders and customers or pay dividends," says Dooner. "This means we can put members at the heart of all our decisions."
Plus you'll have greater access to the institution itself, with apps like CUA's iM CUA app. Dooner describes it as an innovative banking channel, which he says, "allows members to choose their own personal banker and enjoy the convenience of chatting to the same person every time from their smart phone".
The bottom line, however, is that you should educate yourself on what's actually being done with your money — whether you act as a stakeholder or otherwise, your financial institution should reflect the social values you hold yourself.
Take it from Dooner: "The credit union model was founded out of the desire to provide fair and affordable finance, putting people before profit. So for anyone looking for a socially responsible, purpose-led banking provider, credit unions are a great option."