Using a credit union to conduct all your banking activities is a good move for many reasons. Unlike banks, credit unions are not-for-profit organizations. This means that they are not operating to make money off their members.
When people open a credit union account, they are known as “members,” not “customers.” As a member of a credit union, you own part of the institution. This is vastly different from banks, which are owned by investors, not their customers.
Becoming a member of a credit union allows you to participate in certain decisions made by the institution. Most credit unions hold annual or semi-annual member conferences, during which time each member may cast a vote on important policies and other decisions.
Depending on the institution, you may be able to open an account at a credit union online with just a few pieces of information. However, you generally must prove that you qualify as a member.
Credit unions are typically only available to those who belong to an organization or are linked by some kind of association. Many credit unions often restrict membership to groups such as:
- Police, fire, EMS and other first responders.
- Employees of a particular company.
- Members of a labor union.
- Members of a school district.
- City or town workers.
- Members of a particular zip code.
More recently, however, credit unions are relaxing their membership requirements. You may find a credit union that allows you to pay a membership fee to belong if you do not qualify based on its member criteria.
Looking to open a bank account that has no or very low fees? Credit unions typically carry the least amount of fees because of their not-for-profit structure. Since they do not need to make money off their members, they can afford to waive maintenance fees, overdraft charges and other types of fees.
Lower fees aren’t the only way to save money with credit unions. Bank interest rates tend to be higher on loans than credit union interest rates. You may be able to secure an auto or personal loan with a much lower interest rate.
Using a credit union to open a high-yield savings account could save you money, too. A credit union savings account is considered high-yield when it earns you money for making deposits. Savings account interest rates at credit unions tend to be higher, which means more money in your pocket for investing.
While banks may offer the quickest rollouts of new banking technology, credit unions aren’t far behind. Most offer things like smartphone apps, mobile banking capabilities and digital transfers. Online banking at credit unions is pretty common in 2023, so you don’t have to worry about traveling outside of your home area without access to your money.