It’s no secret that shopping locally is beneficial for the community. But did you know customers and their communities can reap big rewards when they bank locally, too? When consumers open a new savings account, sign on for a credit card, or take out a car loan with neighborhood credit unions, they’re funneling dollars right back into the local economy. At the same time, they’re often taking advantage of better fees and lending options.

“These financial institutions are depending on local economies to keep them running,” says Denise Keiser, a financial coach and counseling program manager for BALANCE, which provides comprehensive financial counseling and education services. “So, with that in mind, they’re going to do the most that they can for their community to make sure they have a good economic condition.”

This can include financial literacy programs, volunteering, and even support during crises. Credit unions aren’t just focused on profit, but doing the right thing to support their members’ financial success, making their communities stronger in the process.

“Not being motivated by that profit really does impact how you behave and the products that you offer and the time you spend with members,” Augustine says. “It has a trickle-down effect on everything.” 

That mission and purpose reaches across the products and services that credit unions provide to their members at Direct Federal Credit Union, a not-for-profit with membership open to anybody who lives, works, worships, or attends school in Norfolk or Middlesex counties. 

Profits are shared with members through higher yields on deposit accounts, fewer and lower fees, lower loan interest rates, and individualized lending flexibility, he says. The operating model of one branch allows for low rates across all categories, including its Visa Balance Transfer Program that helps borrowers with high-interest credit card debt. The program has no balance transfer fee and no annual fee, 0% APR for 6 months, and then just 8.74% until balance is paid off.

This doesn’t mean compromising on features that national banks boast, however. Direct Federal Credit Union has invested in the technology that allows for online banking, while also investing in the community. 

Teaching communities

Education is a key service that most credit unions provide, especially as they help people get back on track with healthy financial habits, Keiser says.

Sometimes that education is through community classes. Other times it’s through conversations with individual members when they come in to ask about borrowing money or to find out how they can lower their rates, Augustine says.

“That’s not a profitable transaction, sitting down and spending an hour with someone, going over their credit report and helping them qualify to lower their rates,” she says. “But it’s a service-oriented thing to do. It’s the right thing to do.”

Direct Federal Credit Union sponsors financial education classes across schools in Massachusetts. Last year, Direct Federal provided financial literacy classes to 626 students for a total of 2,087 hours of learning time. 

Giving back

Like other credit unions, serving the community beyond its members is core to Direct’s mission, says Michael Ferreer, Direct Federal Credit Union’s chief member officer. Direct Federal Credit Union offers financial support to nonprofits in any of the 82 cities and towns it serves, recently donating $46,000 to Storytime Crafts for the purchase of its first vehicle to ensure that it can provide literacy tools to local communities. 

And its 81 employees volunteer 540 hours per year in the local community with groups such as the Ellie Fund, Waltham Boys and Girls Club, Hope and Comfort, and League School. “Volunteering is the backbone of who we are,” Ferreer says. 

With their members and communities at the center of everything they do, credit unions are designed to be poised to respond to the next community crisis or need — whether it’s a hurricane or an individual member’s dream to buy their first home. And when customers bank locally, they’re backing that mission and purpose.

“Credit unions have a vested interest in making our communities stronger,” Ferreer says, “because we are in those communities and are focused on helping our members meet their financial potential.” 

Support during crises 

The benefits of being a member of a credit union go beyond banking, and even beyond the community building aspects. Direct Federal Credit Union is even there during emergencies with its Member Relief Program.

That kind of responsive, personalized service is a cornerstone of credit unions, and a hallmark of their reason for being — to serve members and to make the communities they serve stronger. “‘People over profits’ is an expression you often hear regarding credit unions,” says Ferreer, “and it’s true.”

With local needs constantly shifting, especially in recent years amid the COVID-19 pandemic, credit unions are designed to be nimble — extending help in a tight local housing market or providing loans for vocational training so residents have the right skills for a new local employer.

“As local lenders, credit unions can provide members with a wealth of knowledge about specific communities,” Ferreer says. “We are experts on borrowing in the communities we serve.”

That personalized and local service stems from a longstanding central mission for credit unions to give access to credit to people who don’t have it, says Stacy Augustine, president and CEO of CU Strategic Planning, a credit union consulting firm. 

Even back during the Great Depression, as consumers lost access to banks, the Federal Credit Union Act authorized federally chartered credit unions in all states, fueling their growth as communities banded together to launch them and help each other.

Setting themselves apart

So while credit union members are able to stay local and help drive community support, do they miss out on anything the big, national banks offer? In some cases, yes. There could be a tradeoff between the ease, convenience, and technology of big banks when switching to a credit union, where financial education, philanthropy, and volunteerism are prioritized. 

But not with Direct Federal Credit Union. Direct Federal is a one-branch credit union that has intentionally designed their operating model to have a single branch locally, but also has the technology to allow members to bank from wherever and whenever they are. With Direct, members don’t need to choose between banking locally or supporting big banks.  They can have it all.