Economies on all global fronts are experiencing record high inflation rates as the post pandemic period took a turn for the worse when Russia invaded Ukraine. As employers struggle to keep their business afloat, employees on the other hand, rely on their credit union to help them face financial challenges. Even better still is that not a few of these credit organizations are now using online banking apps.
Actually, a credit union is not the same as a trade union or labor union, but basically works more like a bank. It’s a non-profit fund raising organization that aims to pool money by way of deposit contributions coming from union members. As such, a credit union serves only the needs of members, especially as a source of low cost loanable funds.
Any income derived from loans extended to members will either be distributed as dividends or be used in furthering the services being provided to union members. A board of directors decides on how surplus money collected from loan availments, will be allocated or spent.
An example of credit union spending deemed necessary is the development of an app that enables members to access their union bank account online. Similar to how online banking works, a credit union app permits members to quickly check their account balance, make online payments or to transfer funds to accredited payment processors and other financial institutions.
Generally, credit unions do not fail because fund management is carried out with a great deal of transparency. More so, if members use their credit union app to constantly check their account balance. Readers seeking for more information about online banking will find additional resources at Afri Bank Online. As it is, the focus of discussion in this article is about credit unions and their significance to low and middle income employees during times of economic crisis.
What Exactly Does the NCUA Guarantee?
The National Credit Union Administration or NCUA is the credit union counterpart of the Federal Deposit Insurance Corp. (FDIC), which offers protection on bank deposits.
If unfortunately a credit union goes bankrupt, the members who still have balances in their personal account can claim and receive the amount from NVAC, provided a claimant has already settled any outstanding loan or liability with the credit union.
The NCUA guarantees deposit amounts of up to $250,000 only. This denotes that members whose credit union deposit exceeded $250k at the time of the union’s bankruptcy, can only recover up to 250K.
The US Congress created the NCUA as guarantee of protection to members. The federal government supports credit unions because they encourage wage earners to save money for future emergency, without need to withdraw their union savings or borrow money from commercial lenders.
However, since the NCUA guarantees only up tp $250.000, it would be advisable to maintain a deposit balance of $250K or below. A worker can simply join another credit union and maintain another deposit account. The NCUA insures deposit balances up to $250,000 per institution and not on a per person basis.