According to the Credit Union National Association, more than 96 million Americans belong to a credit union. How do you know whether your should jump ship from your bank to join a credit union? It depends on a wide variety of factors, like convenience, technology, and your banking needs.
To determine if you might benefit from joining a credit union, take a look at some of its advantages:
Low minimum balances
Unlike at banks, credit unions generally require a small minimum balance to open an account, so you can utilize a credit union’s services at very reasonable rates. For instance, anyone in the Chicago area can join Alliant Credit Union by donating just $10 to Foster Care to Success and depositing $5 into a checking account. In Wisconsin, a one-time donation of $5 to the Connexus Association will make you eligible to become a member with the Connexus Credit Union.
No or low-fee checking accounts and ATMs
Have you used an ATM from another bank and been surprised at the high fees you were charged? Bank customers lose a lot of money on hefty fees associated with checking accounts and ATMs. At many credit unions, though, members generally pay no fees or more modest fees for using non-participating ATMs.
While one common criticism of credit unions has been that they are not convenient, many unions belong to a shared branching network, which allows members to use participating credit unions anywhere in the country.
Better interest rates
In general, credit unions offer lower interest rates on loans and higher rates on savings accounts compared to banks. See a comparison of rates via the National Credit Union Administration.
Compared to banks, credit unions generally earn higher customer satisfaction ratings. Plus, they’re much smaller than banks. According to the Credit Union National Association, the average credit union in 2012 had $149 million in assets, compared to $2.2 billion for banks. Belonging to a credit union increases your chances of getting personal attention and human interaction.
You’re a member, not just a customer
Banks are for-profit institutions whose aim is to make money for stockholders, whereas credit unions are not-for-profit entities. At a credit union, you’re a member or stakeholder, not just another customer. That means you have a say in how things are run, a benefit you won’t get at a bank.
Credit unions are a great source of financial information. Many hold seminars to help educate members or offer free tools online. They also offer counseling services to members who have credit issues and oftentimes outreach to underserved neighborhoods in the community.
Some credit unions offer student scholarships to members. Also, credit union members can get product discounts through a national rewards program and even earn cash back for certain purchases. To get the discounts, visit LoveMyCreditUnion.org.
They’re easier to join nowadays
To join a credit union in the past, you had to either work for a specific company, be a member of a particular organization, or work a certain kind of profession. While membership in a credit union still depends on belonging to a defined group, these days that definition can be pretty broad. If you are part of a particular community like a workplace or region, you might be eligible to join a credit union and not even know it.
See if you’re eligible at websites like MyCreditUnion.gov and by asking your employer or local government.