What is a Credit Union?

A credit union is a financial institution that works differently from a bank.

Individuals join as members of a credit union because of a region they live in or company they work for. Credit unions typically offer the same services as banks, including deposits, loans and mortgages at lower rates.

The reason credit unions can offer lower rates than banks is because they are not for profit organizations. This means that credit unions do not have to pay taxes and can offer fewer fees and lower rates to members.

Being a member of a credit union also has the advantage of owning a portion of the company, and receiving a portion of the profits. Members are also able to vote on important matters in the credit union, including the Board of Directors.

Is A TFCU Career Right For You?

Do you love your credit union? If so, here's your chance to begin your career with TFCU. Tropical Financial Credit Union is a non-profit financial institution and our employees have been serving members of South Florida for over 70 years. Interested in becoming one of them? TFCU is looking for talented prospective employees to fill entry level and higher positions. If you think you have what it takes, watch our employment video to learn more.

President Obama Thanks Credit Unions for Small Business Lending

At a White House briefing on Wednesday, NAFCU President Fred Becker thanked President Obama for acknowledging credit unions' role in small business lending.

In a number of initiatives designed to open small business access to credit, the Obama administration included credit unions that serve as community development financial institutions in a proposal that would provide lower-cost capital if they lend to small businesses in the hardest hit rural and urban areas.

Obama noted his appreciation “for all that credit unions are doing” in lending to small businesses and business owners.

Establishing New Credit with a Credit Card

While the task of establishing credit can seem daunting while sitting at square one, there are a few things you can do to begin the process of establishing credit in your name.

Here are some tips for establishing credit:

1. Start by putting utilities in your name.
2. Open a checking and savings account with a financial institution and keep them in good standing. This will encourage your financial institution to consider you as a credit card applicant.
3. Pay your bills on time and keep overall debt low.
4. If you choose to open department store credit cards, use them to establish credit only. Purchase one item per month and pay the entire balance off monthly.

Small Business Banking: Free Business Checking and Savings Accounts

As a small business owner, you want to focus on banking features that are available, useful and help you realize success with your company. Each financial institution offers unique small business banking programs and packages, ranging from free business checking accounts, business savings accounts, loans and credit card services as well as online features from credit unions and banks.

Here are a few things to consider when looking for a small business banking account:

• Some credit unions and banks offer free business checking accounts, while others require a minimum balance.
• You may need after hour depositing. Many small business banking programs include this.
• Most banks and credit unions offer a debit card or check card with the opening of a free business checking account.
• You may have an option of an unlimited amount of transactions when you start a free business checking account with your credit union or bank or there may be limits on usage and account balances.
• Overdraft protection can be useful when you use your business savings account to cover any overages by your business checking account.
• Your business funds can earn money with an interest bearing savings account.
• CD's and money market savings accounts are offered as another source of generating money with your business savings account.
• Small business loans from credit unions or banks can be an essential element for expansion in the event that you do not have the capital to cover the cost of growing your company.
• Online business banking has opened the door for convenient, 24 hour access to your account including statements, bill payment and the transfer of funds across accounts.

Credit Unions Remain a Safe Haven

With banks failing weekly, savers worry about the longevity of their financial institutions and the security of their savings, while borrowers scramble to find willing lenders offering affordable rates. 

Thankfully, more and more former bankers are finding safe haven in their local credit union. Credit unions seem like a no-brainer, boasting higher interest rates for savings and lower rates for loans than traditional banks. 

Credit union membership rose 5 million from 2004 to 2008. Credit union lending rose $36 billion from 2007 to 2008, coinciding with a decrease in bank lending of $31 billion in the same year. 

Not only do credit unions offer better rates, they blow the competition away with outstanding customer service, all without monetary assistance from the federal government. 

"The credit union industry has proven solid," said Karen Dorway of BauerFinancial, a firm that analyzes banks and credit unions. Loans from credit unions increased 7% last year, largely due to first time mortgages and auto loans. Delinquencies on these loans are less than half of the amount of bank loan delinquencies. 

Banks Take a Hint from Credit Unions

Banks may finally be forced to offer reasonable interest rates on consumer loans and credit cards. 

Since the beginning of the year, millions of credit card customers have been hit by rising interest rates, many from lenders who have received billions in government bailout money. 

Vermont Senator, Bernie Sanders, has proposed a bill which would set a 15% cap on the interest rate for consumer loans. Currently, there is no nationwide usury law which regulates bank consumer loans, and consequently, rates have soared to almost 30% from financial institutions like Citigroup. Rate increases are also evident from Bank of America, JP Morgan & Chase, Capital One and more. Credit Card defaults are quickly rising to a record 10% but banks have not lowered their rates to balance the issue, they seem to be cashing in on the economic downturn. 

If Sander's bill passes, banks will be forced to follow in the footsteps of the National Credit Union Association (NCUA) by capping interest rates at 15-18%. The rate cap has not impaired federally chartered credit unions, like Tropical Financial Credit Union, in their ability to continue lending - even in these tough economic times. 

Sanders believes that even though 15-18% is enough to cover the lender's risk in offering a loan, the banking industry will lobby heavily against this radical bill. However, "the American people are disgusted with the financial industry. They want change." Sanders wonders if it is in fact ethical to charge 30% interest rates, when credit unions are thriving and staying under 20%. 

Lending is Up, No Thanks to the Bailout

Lending is up, but it's not an effect of the bailout. Smaller financial institutions are driving the lending market singlehandedly. 

In fact, lending has grown more slowly among financial institutions who received a bailout than those who were uneligible. Some of the largest banks (Bank of America, JP Morgan Chase and Citigroup) have even reported declines in loans given on their latest financial statements. 

Smaller banks and credit unions have boosted lending in part by diverting business away from larger financial institutions which offer fewer lending options and higher rates. 

People are looking toward credit unions and small, local banks when they are unable to finance what they need at a larger institution. 

Smaller, local banks and credit unions are able to understand local markets and react to the financial crises occuring in places like Florida and Nevada. Larger banks tend to treat all communities the same and do not offer reasonable lending options in states experiencing financial troubles. 

Think Small and Local

Small financial insitutions and credit unions have been noticing deposit increases over the last three months. Americans are weary of big banks and many of their customers are turning to smaller, local financial institutions. 

While the other banks were failing, credit unions noticed an increase in small business customers and requests for housing loans. Credit unions are seeing growths of nearly 50% from last year. The smaller the financial institution, the more appealing it is to customers. Large banks can't compete with the deposit and loan rates that credit unions have to offer. 

Florida Tops Nation's Mortgage Loan Defaults

According to the Mortgage Bankers Association, Florida has one of the highest third quarter loan delinquencies in the nation. 

Florida topped the nation in subprime adjustable rate mortgage (ARM) foreclosures as well as prime and subprime fixed rate mortgage foreclosures. 

However, there are financial institutions in Florida who can help. 

Don't become another statistic, refinance your mortgage with Tropical Financial Credit Union.