Credit unions: Democracy in action

Men shaking hands

America's credit unions offer a rational, economical alternative to mainstream banking for consumers who don't want or need an extensive ATM network or a branch on every corner. They also give you something that banks do not: a vote in how they are governed.

I've been a member of a federal credit union for the past 15 years. I've come to think of it as one of my happy places, a sane refuge when writing about the foibles of modern retail banking starts to close in.

It gives me comfort to see basic banking services delivered promptly and efficiently -- with a smile and without an ulterior motive.

What makes credit unions different -- and I dare say superior -- to banks is democracy.

From their earliest iterations in England and Germany in the mid-1800s, credit unions have been democratically governed -- one member, one vote -- with a member-elected board of directors composed of volunteer members.

How does that translate into a consumer experience?

My best shot: A bank is the equivalent of shopping at Tiffany's; a credit union the equivalent of shopping at Costco. There's a sensible, egalitarian spirit at my credit union that is entirely absent at my retail bank.

Equally refreshing, my credit union is free of agendas.

Unlike banks, which are driven to perform (read: sell) to please their shareholders, a credit union answers solely to its members, effectively eliminating that sales environment.

Which helps explain why fees and rates are so attractive at credit unions.

There is a refreshing absence of crazy bonus clubs or promotions du jour to bedazzle you. Credit unions simply return their profits to their members in the form of reasonable fees and returns, without need of subterfuge.

Credit unions also are less likely to fail than a commercial bank. After all, it's our money.

Why would we, as a collective, choose to endanger it?

According to the National Credit Union Association, or NCUA, in 2011, 44 FDIC-insured banks failed through May compared to just nine NCUA-insured credit unions.

Despite an industry reputation for playing it safe, my credit union often surprises me.

For instance, I once purchased a used vehicle for $10,000. My credit union offered a secured loan that paid for the vehicle and allowed me to pay it back monthly via auto-payments from my account with no fees or interest. Try that at a bank near you!

Credit unions aren't perfect, of course. Democracies never are.

Because they're smaller, they rarely feature an extensive nationwide ATM network or many branch locations.

But it has been my experience that what you trade in convenience is more than made up for in personal service -- and a vote!

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