What is a Credit Union?

A credit union is a not-for-profit financial institution owned by its membership. So… not a bank, which is owned by shareholders. Credit unions and banks offer similar products, but who they serve is the key difference. Check out how>>

How do they work?

First things first, credit unions require a membership. A person seeking to open an account with a credit union must meet eligibility requirements and pay a one-time membership fee. Eligibility ranges from credit union to credit union, and so does the cost of membership, so make sure you research which one is right for you.

Once you’ve become a member of a credit union, you have a voice! Elected by its members, credit unions are managed by a volunteer board of directors. This allows members’ best interests to be at the forefront of the credit union. As a bonus, profits earned by the credit union are reinvested; this usually means lower rates and fees on loans or higher-rate savings accounts. That’s money given back to the members!

On top of it all, your money is safe. Most credit unions are federally charted, which means the federal government, through the National Credit Union Association (NCUA), insures your money up to $250,000.

What do they offer?

  • Checking/Savings Accounts – Many of the products and services offered at a bank, are also offered at a credit union, like checking and savings accounts, loans, and mortgages. Not every credit union offers the same products and services, instead, they tailor their selection to best serve their community.
  • Branches and ATMs – Your specific credit union more than likely only has branches and ATMs located in your community. Don’t fret. Credit unions still offer convenience like the mega-banks. Through the Co-op Shared Branch, participating credit unions can perform a range of transactions across the country. This comes in handy when you travel!
  • Stellar customer service – Credit unions are dedicated to investing in their members and community. To help fulfill this mission, they often have a robust customer service ready to assist with any questions.

Different types of credit union

  • Employer Credit Unions – Initially, credit unions were created to serve and support people with a common affiliation or association, such as a place of employment or residence. These types of credit unions still exist today. So this may be a benefit you look for in your next job!
  • College Credit Unions – These credit unions open their membership only to students, alumni, faculty, staff, and their family members. Once you become a member, you’re a member for life as long as the membership is maintained, regardless of whether you continue to attend the school. The perks of these credit unions are often financial education workshops and scholarships opened to their members.
  • Low Income Credit Unions – This credit union type is meant to serve a special population where more than 50% of its members qualify as “low income” for designated locations. These credit unions help with unique needs such as small-dollar loans, money orders, and financial education.

Many credit unions have evolved as their community has developed. So you should find a credit union in your area where it only requires a membership fee to open an account.

How to join

If you want a financial institution that cares about your bottom line, join a credit union! Simply, search for a credit union in your area using the National Credit Union Administration’s locator tool. Research credit unions in your area that will hold your common interests and has features that are important to you and your financial goals. Once you’ve found a credit union, confirm your eligibility and open an account! Your financial institution should have one thing in mind: you.