Credit Unions: Not Your Father’s Financial Institution!

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I can remember going to “the bank” with my parents from time to time when I was a child. The buildings were sort of forbidding and intimidating. The tellers sat in “cages,” and the place was as quiet as a library. Armed guards graced the lobbies. Children were tolerated, but certainly not welcomed in such places of business. And maybe that’s the key difference between those kinds of institutions and the credit unions you find in your town today. Banks were and still are for-profit businesses. Credit Unions are institutions which exist to serve their members, and which are in the not-for-profit category. As such, you may find that your local Credit Union has a great deal to offer to your whole family. Credit Unions today are definitely not “your father’s financial institution.” 


Consider what may be available to your family through your credit union. My credit union has a “Cub Club” for children ages 12 and younger. This service is represented by a piggy bank logo and actively solicits the participation of young children. Why would parents want to enroll children in such an organization? Well, think about it for a moment. One of the most challenging things parents have to teach their children is how money works, and how to appropriately handle money. I remember standing behind a young family in line at a store once. The mother was patiently explaining to her two young children that they did not have the money for a particular item right now, and that the children should save up their allowances to buy this special treat. The children listened intently, and then the face of the older child lit up. He was about 8. He tugged on his mother’s sleeve, and told her the problem was solved. She could just write a check! This little guy (and his mom) would have benefited from his participation in a program like Cub Club. 


Such programs often have services especially for the younger members of the family. Children may receive little gifts when they join. Often, there’s a news letter for club members, and children do love to receive their own mail. The Cub Club at this credit union recognizes young savers with a special gift when their savings balances reach $250. Another attractive feature for parents is that earnings in an account like this one may be reported to the IRS under the child’s social security number, not the parents’ social security numbers. 


How about children older than 13, but not yet 18 years of age? Many credit unions offer a sort of continuation of the Cub Club idea by providing special services to teens and students, often at very reduced rates or even at no charge. What a great way to help your young adult establish responsible credit! Many credit unions offer credit cards with controlled spending limits to help young people learn to manage credit appropriately. Credit unions often offer free checking to young people in this age group. Such accounts often include other free benefits as well. One local credit union near me, for example, includes the first 50 checks free, copies of checks (up to 5 a year), traveler’s checks, and postage paid envelopes students can use to mail in deposits from school. 


Now consider those young adults who have reached age 18. These students can obtain a credit card from a reputable institution, their family’s credit union, and continue to learn to use credit responsibly. Did you know that college students are routinely targeted for credit card offers? And it’s a rare child who does not respond to at least one of these offers, and often several. It doesn’t take long for many students to be swimming in debt. Not only are these young adults facing student loans and the rigors of school itself, they may well be facing tens of thousands of dollars in debt---in their own names----when they graduate. As a parent, it makes a lot more sense to make sure your child has a credit card from an institution you can trust with interest rates that won’t break him. The alternative may well be cards with 25-30% interest rates and huge penalties for late payments or over charges. And a credit history that’s ruined before your graduate has his or her first “real” job.


And what happens to those kids when they graduate? They may have nice shiny degrees, but an awful credit history. Since many companies now do comprehensive background checks on prospective employees, your young adult may find himself out of consideration for a job because of his spotty credit history. It’s far better for you, as a parent, to make sure you protect your young adult from this eventuality just as you would from any other difficult situation he or she may encounter growing up. 


So where do you start? No matter how old your children are today, there is probably a credit union offering which makes sense for each of them. Whether they would be delighted with a puppet or a car loan at a reasonable rate, it’s always a great time to introduce them to a responsible financial lifestyle. So contact your credit union today to see what’s out there for you and your family----remember, it’s “not your father’s financial institution” any more.