What is a Union Credit?
A credit union is a non-profit organization that allows its members to borrow and deposit money like a bank. The main difference between credit unions and banks is that banks are for-profit institutions that allow virtually anyone to join.
Credit unions are only open to their members, but these institutions are also owned by their members rather than their shareholders. This means that the profits of the credit union accrue to its members rather than to the pocket of a bank executive.
Who can join a credit union?
Each credit union sets its own rules regarding who can become a member. Some common factors that credit unions use to determine who is eligible for membership include:
- Employer: If you work for a certain company, you may be eligible to join the credit union they sponsor.
- Family members: If a close relative is a member of a credit union, you may be able to join.
- Geographical position: If you live or work in the area where the credit union operates, you may be eligible to join.
- Group membership: If you belong to a union, school or other institution affiliated with the credit union, you may be eligible to open an account there.
Additionally, some credit unions allow virtually anyone to join by paying a small one-time fee if they don’t meet any of the other membership criteria.
If you’re interested in joining a credit union, check out their membership criteria on their website to see if you’re eligible. You can also contact the credit union directly to ask.
Advantages of credit unions
There are several advantages to doing business with a credit union. Here are some of the most important.
The money you put in a credit union is safe, just like the money you put in a traditional financial institution. Credit unions take steps to ensure that only you can access your money, and online accounts are encrypted to protect your information.
Credit union funds are also insured by the National Credit Union Administration (NCUA). This is similar to the banks offering FDIC insurance. It protects your money up to $250,000 per depositor per account type against credit union failure.
Credit unions generally offer lower fees on their loans and banking products than large brick-and-mortar banks. This can make it more affordable to work with a credit union, especially for those worried about monthly maintenance fees with traditional banks.
Annual percentage yields (APY) from credit unions aren’t as high as you’ll find with some of the best online banks, but they generally offer better interest rates than you see with brick-and-mortar institutions. This can help you earn more money in your savings account.
Credit unions generally operate locally and have excellent customer service. Many try to build personal relationships with their members. This can be helpful when applying for a loan, but it’s always nice to have the option of getting personalized support from someone who knows your name when you need it.
Disadvantages of Credit Unions
Although credit unions have a lot to offer, they also have their flaws.
Small network of branches and ATMs
Most credit unions operate in a local area. This might not be a problem for you if you usually stay close to home, but if you travel outside of the credit union’s service area, you might find it difficult to get help when you need it. .
ATM networks are also usually limited to the credit union’s service area, so if you want to get cash while traveling, you’ll have to pay out-of-network ATM fees to use another’s ATM. Bank.
Less product variety
Credit unions generally have smaller budgets than larger banks, which may limit the number of products they are able to offer their customers. But this varies from one credit union to another. Most are still able to offer a variety of banking products, including checking accounts, savings accounts, money market accounts, certificates of deposit (CDs), and loans.
As noted above, credit unions aren’t always open to everyone. Even if you wish to register, it may not be possible if you are not a member of an affiliated group. It’s best to check this before you do any further research on credit union offerings, so you don’t waste your time trying to apply for a credit union you can’t join.
Online and mobile tools
Credit unions don’t always have the best online banking tools, and some don’t have mobile banking apps at all. A growing number of institutions seem to be trying to offer these services to their customers, but if they are not yet available at your credit union, you should feel comfortable visiting your local branch when you need something. thing.
Is a credit union right for me?
Only you can decide if a credit union is a good home for your money. If you’re still not sure, here are some questions that might help you decide:
- What types of accounts am I looking for?
- Do I prefer to manage my finances on my own or with personalized support?
- How often do I travel outside the region?
If you think a credit union might be right for you, explore a few options in your area. You can also see what’s available online. Alliant Credit Union, for example, operates online and has a nationwide network of ATMs. This could be a good compromise if you want to work with a credit union, but are worried about being limited to one location.