What Is a Credit Union Account and Is It Right for You?

A credit union account is a type of savings account that's owned and controlled by its members, not a bank. This means that the profits are reinvested into the credit union, rather than going to shareholders.

Credit unions are typically smaller and more community-focused than banks, which can be a big advantage for people who value personalized service. They're often run by volunteers and non-profit, which can also make them more affordable.

One of the main benefits of a credit union account is that it offers higher interest rates on savings and lower fees than traditional bank accounts. This can be a big deal for people who are trying to save money or avoid unnecessary expenses.

By joining a credit union, you become a member and an owner, which can give you a sense of community and belonging.

Credit unions offer many benefits and advantages that can save you money and provide better service.

Credit unions often have lower interest rates on credit cards and loans, with some credit unions offering variable APRs as low as 10.99%. This can save you a significant amount of money if you carry a balance or take out a loan.

You may also receive higher interest rates on deposits, which can add up to earning more money on your savings. For example, the national average rate for five-year certificates of deposit (CDs) offered by credit unions was 2.66%, compared to an average rate of 1.83% offered by banks.

Lower fees are another advantage of credit unions. Most credit unions offer lower fees on basic transactions, from ATM withdrawals to overdraft charges. Many offer free checking as well.

Credit unions also provide personalized customer service, which can be a big advantage if you value having a more personal touch when dealing with your finances. Since credit unions are typically smaller than banks, they have fewer customers and can give you more individual attention.

Here are some key benefits of credit union accounts:

Less-stringent loan qualifications are also a benefit of credit unions. If you have a good credit history, you may have a better chance of securing a personal loan at a credit union. Some credit unions may also be willing to work with you if you have a low credit score or extenuating circumstances.

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Credit unions are carefully regulated and offer basically the same protection for your money that you would find at a bank.

The National Credit Union Administration (or NCUA) insures deposits under the National Credit Union Share Insurance Fund (NCUSIF) program, which covers savings at federally insured credit unions and works much like the Federal Deposit Insurance Corporation (or FDIC) does for banks.

The NCUSIF is a federal insurance fund backed by the full faith and credit of the U.S. government, and it insures deposits up to $250,000.

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Credit unions and banks are legally required to maintain a reserve requirement of assets to liabilities, which helps ensure stability.

This means they have to keep a certain amount of their assets in reserve, rather than lending it all out.

In some jurisdictions, deposit insurance is available to reimburse depositors for funds lost up to a certain threshold.

For example, the National Credit Union Administration’s Share Insurance Fund and the Canada Deposit Insurance Corporation offer this protection.

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If a credit union or bank is unable to maintain positive cash flow and declares insolvency, its assets are distributed to creditors in order of seniority according to bankruptcy law.

This means that depositors may lose some or all of their initial deposits if the bank's assets are insufficient to cover all claims.

In some cases, depositors may be reimbursed for their losses through deposit insurance, but this depends on the specific insurance program and the amount of the loss.

Credit unions are regulated and offer the same protection for your money as a bank. The National Credit Union Administration (NCUA) insures deposits under the National Credit Union Share Insurance Fund (NCUSIF) program, which covers savings at federally insured credit unions.

The NCUSIF is a federal insurance fund backed by the full faith and credit of the U.S. government, insuring deposits up to $250,000. This means that if your credit union fails, you'll be reimbursed for funds lost up to $250,000.

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The NCUA also issues annual grades to each credit union, assessing their fiscal health and management. This helps ensure that your money is safe and secure.

If you have multiple accounts at a credit union, your total shares are insured up to $250,000 per account. For example, if you have an individual account, a Roth IRA, and a business account, your total shares are insured up to $750,000.

Here's a breakdown of the deposit insurance provided by the NCUA:

This means that you can rest assured that your money is safe and secure at a federally insured credit union.

To join a credit union, you may qualify if you live in a certain town or work with an eligible employer, or if one of your family members is already a member of a particular credit union.

Some credit unions allow you to become a member by joining a participating organization, which may come with a small fee, but the credit union might pay it on your behalf. For example, Alliant Credit Union allows you to become a member by joining the charity Foster Care to Success, and they'll even pay the $5 fee for you.

To become a member, you may also be required to pay a one-time membership fee, which is usually up to $25, and open an account with a small deposit, typically below $10.

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You can become a member of a credit union in many ways, but each has its own requirements. You may qualify if you live in a certain town or work with an eligible employer.

Some credit unions allow you to become a member by joining a participating organization, which sometimes comes with a small fee. Alliant Credit Union, for instance, allows you to become a member by joining the charity Foster Care to Success, and they pay the $5 fee on your behalf.

You may be required to pay a one-time membership fee, generally up to $25, and open an account with a small deposit, usually below $10.

You should start with your local credit union, as you'll likely have better chances of meeting membership eligibility requirements compared to a credit union based outside of your local community.

Some credit unions still have specific eligibility requirements, so be sure to check out a credit union's "field of membership" section on its website for details about joining.

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Choosing a credit union can be a great option for those looking for a more personalized banking experience. There were 6,424 credit unions in the U.S. in 2015, so you have plenty of choices.

To find the right credit union for you, start by doing some research to see which ones you qualify for. At least 60 credit unions offer nationwide membership, which is a great option if you're not tied to a specific location.

You may qualify to join a credit union simply by living in a certain city or belonging to a specific organization. Some credit unions also offer membership for an annual fee, usually between $15 and $50.

If you're unsure about the qualifications, it's easy to call the credit union and ask what you need to do to join. Once you've narrowed down your options, investigate which credit unions offer the services you need.

Credit unions and banks have some key differences. Credit unions are nonprofit, member-only financial institutions, whereas banks are for-profit institutions open to anyone.

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Credit unions often have a smaller selection of product offerings compared to banks. However, they offer some of the best terms thanks to how they reinvest profits back into their products, making them a more competitive choice.

Here's a comparison of credit unions and banks:

Overall, credit unions offer a unique set of benefits, including lower interest rates on credit cards and loans, higher interest rates on deposits, and lower fees.

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Credit unions offer some amazing advantages over banks, and I'm excited to share them with you. One of the biggest perks is that credit unions often have lower interest rates on credit cards and loans, saving you a significant amount of money if you carry a balance or take out a loan.

For example, the Titanium Rewards Visa Signature Card from Andrews Federal Credit Union offers variable APRs as low as 10.99% and no greater than 17.99%. This can make a huge difference in your financial situation.

Another advantage of credit unions is that they often have higher interest rates on deposits, which can add up to earning more money on your savings. This is a great way to grow your money over time.

Credit unions also tend to have lower fees, and some may even waive certain fees on bank accounts and credit cards. This can save you money and make managing your finances easier.

One of the things that really sets credit unions apart is their commitment to personalized customer service. Since they're typically smaller than banks, they have fewer customers and can offer more individualized attention.

Here are some key differences between credit unions and banks:

As you can see, credit unions have a more limited selection of product offerings compared to banks. However, this doesn't mean they offer less competitive terms - credit unions reinvest their profits back into their products, making them just as competitive as banks.

One of the main differences between credit unions and banks is the number of physical locations they have. Most credit unions have considerably fewer brick-and-mortar locations than banks.

This can be a drawback for clients who prefer in-person service. They may have to travel further to access a credit union branch.

However, many credit unions offer modern services such as online banking and auto-bill pay, making it easier to manage finances remotely. This can be a convenient option for those who don't mind banking online.

When I compared the offerings of credit unions and banks, I noticed a significant difference in the number of products and services they provide. Credit unions often have limited choices, which can be a drawback for some customers.

Bank of America, for example, has a wide range of credit card options, with 20 different choices available. This is in stark contrast to the Navy Federal Credit Union, which has only six credit card options.

The State Employees' Credit Union takes it a step further, offering a single credit card option to its members. This lack of variety can be a limitation for those who value having multiple financial products under one roof.

Credit unions are a viable alternative to banks, offering unique advantages that can benefit your finances. They often provide lower interest rates on credit cards and loans, saving you money on interest payments.

Credit unions may offer some of the lowest interest rates on credit cards, such as the Titanium Rewards Visa Signature Card from Andrews Federal Credit Union, which has variable APRs as low as 10.99% and no greater than 17.99%.

You may also receive higher interest rates on deposits made to a credit union account, which can add up to earning more money on your savings.

Credit unions are known for their lower fees, and some may even waive certain fees on bank accounts and credit cards.

Personalized customer service is another benefit of credit unions, as they often have fewer customers and a reputation for providing more responsive service.

Here are some key differences between credit unions and banks:

Keep in mind that credit unions are structured to serve a particular region, industry, or group, which can limit their accessibility. However, many credit unions are part of expansive ATM networks, providing customers with ample access to their funds.

By shopping around online or visiting a local branch, you can compare the products offered by credit unions to those of major banks and make an informed decision about which option is best for you.