Why credit unions are gaining in popularity over traditional banking institutions

The year was 1956 when a group of Wheaton teachers pooled their money together to provide low-interest loans.

What is now known as DuPage Credit Union was “started in a closet” by those teachers from Wheaton Community High School. Initially started to serve teachers, DuPage Credit Union today has more than 41,000 members, many who are not teachers, and more than $560 million in assets, said Kimberly Alongi, residential lending sales manager at the credit union.

Credit unions have been serving their members for decades. Many, like DuPage Credit Union, started out to serve a specific population such as teachers, steelworkers or employees of a specific company. Today, however, credit unions are more open to membership.

DuPage Credit Union, for example, only requires that a member live or work in one of the seven counties it serves or be related to someone already a member.

“We might have started for a select group, but most credit unions now are open to the community,” Alongi said.

What makes credit unions different from a traditional bank?

A credit union serves its members, not shareholders, meaning profits are put to work for the members resulting in lower interest rates on loans or higher-yielding savings accounts.

“It’s just what they do with the profits that is different” from other financial institutions, said Melissa Vidito, director of marketing and communications for the Illinois Credit Union League.

For example, credit card rates at credit unions are often lower than a traditional bank. According to America’s Credit Unions, a national trade association, the annual interest rate on a rewards credit card from an Illinois credit union averages about 15.07%, compared to 19.04% at a traditional bank.

Looking for a new car? The average annual interest rate on a 60-month car loan is 6.4% at an Illinois credit union compared to 7.42% at a bank. A one-year certificate of deposit with a balance of at least $10,000 will earn on average 2.76% in interest annually at an Illinois credit union compared to on average 0.79% at a bank, according to the association’s March report.

What drives credit unions?

In many instances, credit unions were formed to help underserved populations.

“We place a strong significance and importance on the financial well-being for all,” Vidito said.

Alongi noted that mortgage and loan specialists at DuPage Credit Union are not commission-based and work to meet a member’s needs.

“We are definitely here to be that guiding resource and to be those subject matter experts to help people,” she said, noting the credit union often hosts seminars to help members learn the ins and outs of buying a new car or home.

While members can be turned down for loans, Alongi said credit unions often will work with their members to better understand what’s happening financially and help them rebuild their credit.

“We’re more inclined, as a credit unions over traditional banks, to take that risk to make sure we’re serving the underserved,” she said. “The credit union philosophy, in general, is people helping people.”

But can I bank anywhere with a credit union?

Most credit unions have a wide network of ATM locations and offer online banking services. Credit unions also have reciprocal banking agreements with other credit unions, allowing members to bank out of state at another credit union if the need arises.

Alongi noted most credit unions also have traditional banking hours for in-person visits.

To learn more about credit unions or find a credit union near you, visit ibelong.org.

DuPage Credit Union has three banking locations at 790 Royal Saint George Drive in Naperville, 725 Ogden Ave. in Downers Grove and 625 E. Roosevelt Road in Wheaton. For more information, visit https://www.dupagecu.com.