As you do your day-to-day banking and also plan for the future, it’s important to pick a financial partner whose values align with yours and who offers the products and services that will be most useful to you on your personal financial journey.
As a member-owned, not-for-profit financial cooperative, we hold ourselves to a higher standard. Our people-before-profits philosophy is deeply rooted in our mission: To build our members’ financial health and well-being. Keep reading to see how our being a credit union helps us to achieve our mission.
How are credit unions different from banks?
The main difference between credit unions and banks (and fintechs and neobanks) is the way they are organized. Credit unions are designed similarly to a cooperative where members are co-owners in the financial institution. Credit unions are not-for-profits that have the regulatory approval needed to offer the financial services that banks do, such as loans and insured deposits. However, unlike banks, the core of credit unions are members and member benefits – instead of shareholders and profits.
A brief history of credit unions
America's first credit union opened in Manchester, New Hampshire, in the early 1900s. They took on a deeper significance during the Great Depression to support citizens devastated by the economic crash. In 1934, the Federal Credit Union Act was signed into law by President Franklin D. Roosevelt. Overseen by the federal government, the law established a nationwide credit union system to help citizens with lower incomes access credit for "provident purposes.” Since their inception, credit unions — as opposed to traditional banks — have upheld the mission of providing financial accessibility and making decisions in the best interest of members, instead of in the interest of profit. “Members know their credit union will be there for them in bad times, as well as good,” writes the Credit Union National Association.
As of 2021, well over 100 million people are members of credit unions. While credit unions were historically designed to be cooperative financial institutions for people who shared a common bond, such as the same employer, today many credit unions focus on serving certain communities and geographic areas, and are open to anyone living in their footprint. (Patelco began as a credit union for employees of Pacific Telephone Company and today primarily serves the Northern California region.)
What does it mean to be a “not-for-profit" financial institution?
Each time you make a deposit at a bank, your bank takes some of the money from your account and lends it out to other borrowers. This could be for an auto, business, home or personal loan, a line of credit, or another financial product. The interest paid on the loan is the bank’s revenue. The difference between the interest earned by the bank on the loan and the interest paid to you on your savings account is the profit for the bank. So technically speaking, whenever you deposit money into your savings, checking, money market or any other share account, you are lending your money to the bank to use. The profit that the bank makes is then held by the bank or paid out to its owner or shareholders.
But what about at a credit union – where does the money go? Credit unions still make a profit (because they receive income on loans and other products), but because they are a “not-for-profit,” this profit is not the end goal – and there are no private owners or shareholders waiting for that profit to be paid to them. Instead, at a credit union, money earned is typically reinvested to develop the credit union’s products and services for members, and paid out to members in the form of dividends or better rates. As not-for-profits, credit unions have no outside stakeholder funding (like investors in the stock market, for example), and rely on their members’ deposits.
At Patelco and other credit unions, being a not-for-profit means that we take what we earn and give it back to you in the form of better products, fewer fees, and higher savings rates.
How do we keep up with the big banks?
Our products and services are just as good as what you expect from a large bank – and they also support a healthier financial future. Everything we offer – from checking accounts to digital options to personal financial counseling – is designed with you in mind. Here’s some of our best-in-class products:
- Our Plus Checking Account offers automatic savings round-up with a 10% match, identity theft protection, worldwide ATM fee rebates, exclusive discounts and other unique benefits valued at $642 annually.*
- Automatic Rate Reduction automatically lowers loan interest rates for members who don’t initially qualify for our lowest rate, as a reward for on-time monthly payments.
- The top-rated Patelco Mobile App for iPhone and Android puts everyday banking tasks in the palm of your hand – plus features innovations like showing your balance and recent transactions without requiring you to log in.
- Our Money Market Select Account offers a high interest rate for the first $2,000 deposited, encouraging members to save and build an emergency fund.
- Personal financial counselors can meet with you at our branches for complimentary consultations. Most of us have more questions than answers, and it can be difficult to get objective advice.
How else does Patelco demonstrate its difference?
At Patelco, we have the flexibility of supporting our members in ways that traditional banks do not. During the COVID-19 pandemic, this looked like:
- Approving 700+ mortgage deferrals
- Approving 9,400+ consumer loan deferrals
- Distributing over $5 million in member relief loans
- Waiving over $700,000 in fees
- Helping over 10,500 members during this economic crisis
Before COVID-19, we put our members first – and this was no different when the pandemic hit. We continue to put our members' needs as the focus of our work.
*Identity, Credit, and Round-Up features all require enrollment. Insurance products are not a deposit, not NCUA insured, not an obligation by the Credit Union or its affiliates, and not guaranteed by any government agency. ATM fee rebates do not apply to any fees other than those assessed for using an ATM to withdraw cash from your Patelco Credit Union account. Cell phone protection is subject to additional terms and conditions. Participating merchants on Patelco Plus are not sponsors of the program, are subject to change without notice, may not be available in all regions and may choose to limit deals. Policies and account features subject to change without notice. Combined services valued at $642 per year based on data from websites for Lifelock®, AT&T®, Sprint®, and Verizon®. $6.95 monthly fee applies.