What is a Credit Union?
Credit unions are not-for-profit financial cooperatives owned by their members. Unlike banks (which answer to shareholders), credit unions exist solely to serve their members. Any profits are returned to members through better rates, lower fees, and improved services.
There are over 5,000 credit unions in the US, serving more than 130 million members.
Credit Unions vs Banks
Credit Unions
- Not-for-profit, member-owned
- Higher savings rates
- Lower loan rates
- Fewer and lower fees
- Personalized service
- Membership requirements
- Smaller branch/ATM networks
Traditional Banks
- For-profit, shareholder-owned
- Lower savings rates
- Higher loan rates
- More fees
- Standardized service
- Open to anyone
- Large branch/ATM networks
Benefits of Credit Unions
Better Interest Rates
Credit unions typically offer savings rates 0.5-1% higher than banks, and loan rates 1-2% lower. Over time, this adds up significantly.
Lower Fees
Many credit unions offer free checking with no minimum balance. Overdraft fees, if charged, are often lower than banks.
Personal Service
As member-owners, you're not just a number. Credit unions are known for better customer service and willingness to work with members.
Community Focus
Credit unions often reinvest in local communities and may be more flexible with lending to people banks might decline.
How to Join a Credit Union
Credit unions have membership requirements, but they're usually easy to meet:
- Employer-based: Work for a specific company or industry
- Geographic: Live, work, or worship in a certain area
- Association: Join an affiliated organization (often just $5-15)
- Family: Have a family member who's already a member
Many credit unions have expanded eligibility. Sites like MyCreditUnion.gov can help you find one you qualify for.
Are Credit Unions Safe?
Your Money is Protected
Credit union deposits are insured by the National Credit Union Administration (NCUA) up to $250,000 per account - the same coverage as FDIC-insured banks. Your money is just as safe in a credit union as in any bank.
Potential Drawbacks
- Smaller ATM networks: Though many participate in shared ATM networks
- Less tech-forward: Mobile apps may not be as polished
- Fewer locations: May have limited branch access
- Membership requirements: Not everyone can join every credit union
Who Should Consider a Credit Union?
Credit unions are particularly good for:
- People seeking auto loans (often best rates available)
- Those who want lower fees on checking
- Anyone who values personalized service
- Those looking for mortgage or personal loans
- People with less-than-perfect credit seeking loans
Find a Credit Union Near You
Explore credit unions you might be eligible to join.
Banking Options Guide