Many consumers don’t realize that they are likely eligible to join a credit union. Credit Unions have evolved over the years to being full-service financial institutions that offer the same services that you can get at your bank. At one time, being a member of a credit union usually meant having to work for a certain employer or belong to a certain organization, however, now the vast number of credit unions have what is called a community charter. A community charter means that anyone who lives, works, worships, etc in the community (or communities) that the credit union is chartered for is eligible to join.
Credit unions are owned by the members (account holders) of the credit union. When you join a credit union, you will have to keep a minimum deposit in your account, this minimum deposit marks your ownership in the credit union. The minimum deposit is usually somewhere between $5 and $25. In contrast, banks are owned by stockholders and are controlled by paid officials and stockholders. The owners of a credit union (in other words “the members”) elect a volunteer board of directors to represent their interests in the oversight of the credit union.
Like community banks, credit unions are often both headquartered and operated in the community they serve. Bringing your business to your local credit union helps to stimulate your local economy. This is in contrast to the large regional or national banks where the higher paid jobs are most likely going to workers who are half-way across the country.
Credit unions offer several important benefits over banks. The first is that credit unions typically offer lower loan rates and higher deposit rates than banks. Click here for a comparison of credit union rates and bank rates. In addition to being more competitive with rates, credit unions often have lower fees than banks. Examples of these fees are NSF fees, wire transfer fees, returned check fees, etc. Another benefit of credit unions is that since credit unions are often smaller in scale and more localized than national banks, account errors or concerns are often resolved more quickly and members often even have access to talking to executive level management when they have an unresolved problem or concern.
If you are a person who travels a lot and therefore chooses a national bank for the convenience of having access to your bank’s ATMs while traveling, credit unions offer a solution for this. Most credit unions belong to an ATM network of other credit unions where members of credit unions who are on the same network can share ATMs without a fee. These networks are nationwide, so it is possible to have a credit union account in Maine and use the ATM machine at a credit union in California without incurring a fee.
What about safety? Your money is just as safe at an insured credit union as it is at an insured bank. While most banks have FDIC insurance that covers your accounts up to $250,000, most credit unions are insured by the NCUA which also covers your accounts up to $250,000. FDIC insurance and NCUA insurance both serve the same purpose and are both reliable deposit insurance agencies who are backed by the U.S. government.
In summary, chances are you are eligible to become a member at a local credit union and credit unions typically offer more competitive rates, while offering the same financial services as banks.