Credit unions are nonprofit financial institutions designed to serve their members. In fact, credit unions are member-owned, and they’re managed by a board of volunteers elected by members.
Credit unions are much like banks in that you can open a variety of accounts, borrow money and take advantage of a full range of financial services. The difference is that credit unions give back to their members by using the union’s profits to offer higher interest on savings and lower loan rates and fees.
Credit union members typically have a commonality such as working for the same company, living in the same location, or being part of an affinity group, or “field of membership.” Examples of these groups include alumni associations and advocacy organizations.
Keep reading to learn more about what a community credit union is all about and decide if one’s for you, and then choose the best credit union for your needs.
Credit Union Basics
All credit unions are nonprofit institutions that work for their members to help them save at higher rates and borrow money at more affordable rates than banks typically offer. In addition, credit unions usually provide a more personal service experience for members and often give them access to financial education programs and counseling. You won’t see these services at many big banks, so if a personal touch appeals to you, consider joining a credit union.
Learn More: How Do Credit Unions Make Money?
Benefits of Credit Union Membership
Credit unions offer checking accounts that generally don’t involve minimum balance requirements or fees. These accounts often come with debit cards, direct deposit, and overdraft protection, and some even offer interest payments and free checks.
Due to the unions’ nonprofit status, credit union loans and savings products have favorable rates. In addition, you’ll find expanded services that could include everything from business loans to affordably priced home-mortgage and personal loans, credit cards and insurance, as well as vacation clubs, IRAs and stock brokerage services. Another benefit of using a credit union is that they give members dividends when the unions have surplus income.
Federal credit union deposit accounts are insured by the National Credit Union Share Insurance Fund, and state-chartered credit union accounts are often insured by private insurers, according to MyCreditUnion.gov. Each federal credit union account is insured for up to $250,000 per member per credit union, so your money is safe if the credit union fails.
Where to Find a Credit Union
You can find a credit union in a number of ways. For instance, your employer might sponsor a credit union, or you might find one that caters members of the same church, homeowner’s association, labor union or school. The typical membership fee equals the price of one share in the union and usually costs between $5 and $25.
Learn: How a Credit Union Membership Could Save You More Money
Consider joining a credit union if you want personalized service, reduced fees, better loan rates, and the opportunity to bank with those who have common interests. To find a credit union near you that’s a good fit, simply do a Google search for “credit union near me” and choose a local credit union that suits your needs and matches your interests, and you’ll be on your way to better banking.