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There's been a trend of banks buying credit unions for the past few years. It seems that more and more banks are starting to get into the credit union business, especially in recent years. While this trend is positive for credit unions, there are some things you should know about before deciding for yourself whether or not this is a good thing.
What is a Credit Union?
A credit union is a type of financial institution that was created by members of the same community. They are a good way to save money and make sure you're getting the best interest rates available.
Credit unions are not for profit, and all members own their shares in them. Banks need to make money to pay off their shareholders. Credit unions don't need to make any money to pay their members. Credit unions are under no obligation to charge high fees, and so they try to charge as little as possible on savings accounts. Their interest rates are also much lower than banks.
Credit unions offer fewer products as a result of being smaller than banks. This is especially true for products that involve commercial banking. They also offer fewer investment products than banks, such as savings and checking accounts and credit cards.
Why Banks May Buy Credit Unions
The number of credit unions acquiring community banks is drawing attention. The sudden spate of bank acquisitions has caused long-standing issues relating to banking regulations and the type of membership credit unions can offer.
Credit unions will often try to acquire the assets of community banks because they are easy ways to get into a business that is more associated with banks, namely lending to small businesses. In certain areas, credit unions may acquire community banks in order to strengthen local relationships.
Credit unions and community banks have a more local focus, which is why having these unions buying banks can actually be a good thing. Credit unions that acquire banks tend to keep the branches open and their employees employed. They're also trying to continue to provide locally focused financial services.
The banking industry is evolving rapidly, and credit unions are taking advantage of the situation to get more business. Banks will also have to keep up with the changes and make sure they don't fall behind in this new era of banking.
Banks can expect to see increases or decreases in the number of people selling their assets to a credit union, but it will be determined each year by the number of credit unions that are willing to purchase the bank assets and/or their deposits. If bank sales are up in a given year, that means that the banks will be trying to get the best deals possible.
If that means that the best deal for banks is obtained from a credit union, the banks will continue to sell their assets and/or deposits to credit unions indefinitely. This is because the bank investors want to get the maximum return on their investment.