Credit unions are owned by their members or nonprofit organizations, allowing them the flexibility to offer greater savings advantages to these members. Here’s more about credit unions, how to choose one and how you can find one right in your own neighborhood.
What Is a Credit Union?
A credit union is a nonprofit money management service owned by its members. A few are nationwide and have over a million members, but most are smaller. Credit unions members usually already belong to a group, such as employees at the same company, members of the same church, or living locally.
Credit unions can offer a range of financial services like mortgages, auto loans, checking accounts, savings accounts, credit cards and financial advice. Rather than earning a profit for stakeholders, credit unions use their profits to benefit their members by reducing interest rates for loans or raising interest rates on checking and savings accounts or providing other benefits.
Credit Union Account vs. Bank Account
The biggest difference between banks and credit unions is their goals and ownership structure. Banks have shareholders, while credit unions are owned by their members. Banks usually want to earn profits and increase the value of their shares for their shareholders. Credit unions usually reinvest their profits back in the organization, so they can offer better products to their members. The board for credit unions are usually not paid positions, while they are paid positions for banks. Since credit unions are nonprofit, they are not taxed, but banks are.
Due to the ways revenues are earned and used in banks and credit unions, banks tend to have better apps and rewards, while credit unions often have better customer service and financial products. Since credit unions are designed based on the original group that created them, their offerings are not as consistent across the industry as banks are.
Bank accounts and credit union accounts are both insured for up to $250,000 per depositor. The only difference is banks are insured by the Federal Deposit Insurance Corporation and credit union accounts are insured by the National Credit Union Administration.
Who Is Eligible to Join a Credit Union?
Credit unions often require their members to be affiliated with an adjacent group. That may be a church group, a local area, or even the military. More and more credit unions are accepting anyone as a member; there might be a fee — around $5 to $25 — to join, as well as possibly smaller processing fees.
People can even start their own credit unions if they want to. They would need to all belong to the same company or other affiliated group and agree that they have the resources and expertise to form and run a credit union. Then they can reach out to NCUA to begin the charter process.
Best Credit Unions in the United States
The following table is the top five credit unions in the United States according to U.S. News.
|Credit Union||Benefits||How To Join|
|Alliant Credit Union||Nationwide, high interest rates on savings accounts||$5 donation|
|Consumers Credit Union||High interest rates on checking accounts||$5 fee, $5 deposit|
|Navy Federal Credit Union||Over 300 branches, strong customer service||Military members are eligible to join|
|Connexus Credit Union||Free checking accounts, over 54,000 ATMs||$5 donation|
|First Tech Federal Credit Union||High interest rate on checking accounts and kids’ savings accounts||$8 donation|
How Can I Find a Credit Union Near Me?
Depending on which groups you belong to, where you live, or your preferences, there are several ways to find credit unions near you that will fit your lifestyle.
Member of a Group
The first and easiest place to look is if there is a credit union associated with your employer. You can also ask any other groups you belong to such as religious groups, professional associations or even your family.
National Credit Union Administration’s Locater
If none of those groups offer membership to a credit union you want to join, you can use the NCUA’s locator to find a credit union in your area. Once you search your area, it will bring up credit unions based on their distance from your location and show other features.
The last option is to use Google Maps. Searching “credit union near me” here will bring up credit union branches near you, but based on different criteria than the NCUA search engine.
After you have a list of credit unions near you, examine the services and fees that each one offers. Make sure the credit union is insured. Most will use NCUA, but some will have private insurance. For instance, if you know you will be using many different ATMs, then look for a credit union that offers reimbursement for ATM use outside their network.
Choosing a credit union is mostly a personal preference, but having this knowledge in the back of your mind can help you make the best choice for you.