With more than 57,000 credit unions in 105 countries, more people are leaning towards serving the community through cooperative efforts than for merely turning a profit. You can find credit unions in just about every type of community niche: teachers, military, religious, and more. With so many available, you may be wondering how to join a credit union and which ones offer the most benefits to you and your family.
The Difference Between a Credit Union and a Bank
In the US, as of December 2014, there were 6,399 credit unions according to the World Council of Credit Unions. What is the difference between a credit union and a bank or another type of financial institution? Are credit unions safer than banks?
A credit union works similarly to a bank as it can provide loans, credit cards, checking, and savings accounts. Credit unions are owned by members and are not-for-profit cooperatives.
Members of each credit union are typically united through some type of bond, whether it is a credit union for teachers, armed forces members or a religious organization, the members benefit by having a reliable place to save their money and the ability to borrow at reasonable rates. The staff specializes in serving the specific group with everything from how to get a loan from a credit union to setting up a savings account.
Due to the structure of a credit union, members are open to creating more opportunities than they could with another type of financial institution. If you’re looking to start a small business, grow a farm, build a new home or educate your children, you will want to know how to find a credit union and if anyone can join a credit union.
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At banks, the stockholders receive a share of the profits; however, in a credit union, the net income is applied to interest on loans, savings, new products, and service development. Credit unions are able to offer competitive rates and fees because they serve not just a certain income-based clientele but a broader range of members from low-income to high-income residents.
Just like a bank, a credit union usually consists of a main office, cooperative branches, and ATMs. Plus, you can access your account through your mobile device and online. With all these great benefits, the next question is how to find a credit union in your area?
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Finding a Credit Union in Your Area
There are several sources online to help you find a credit union in your area. The World Council of Credit Unions offers a tool known as “a Smarter Choice.” You can simply fill in your address, including your zip code, in the field to find a credit union closest to you. MyCreditUnion.gov also offers a CU Locator to find one near you.
If you belong to an association or organization, check to see if the members have formed a credit union. Some credit unions, such as Navy Federal Credit Union, may not have local branches in your area; however, the credit union works in cooperation with other financial institutions to give you the ability to use their ATMs for withdrawals and deposits. Many credit unions also allow you to make deposits and transfers with your cell phone, saving you both time and travel.
Are Credit Unions Safer Than Banks?
Credit unions are insured up to $250,000, just like the FDIC, through the National Credit Union Share Insurance Fund (NCUSIF). Unlike banks, credit unions are less likely to raise fees because they are not looking to turn a profit or to share with stockholders, which is one of the reasons credit unions are safer than banks. You are also less likely to get gouged with high interest rates from a credit union as members receive the benefits of a not-for-profit status.
76 percent of credit unions do not require their members to maintain a minimum balance in their checking or savings accounts. The Credit Union National Association (CUNA) stated, in its 2015 Membership Benefits Report, that credit unions provided members $9.2 billion in direct financial benefits. When divided among all members, that is a savings of $173 per household.
Even with rising fees in the future, credit union fees are expected to remain lower than traditional bank fees. Since banks must make a large profit, they tend to take higher risks with their customers’ money, making credit unions safer than banks.
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How to Choose a Credit Union
Choosing a credit union to safely manage your finances is a tremendous decision. How to choose a credit union that offers all the services your family needs? There are several steps you can take to find the best credit union for you and your family.
1. Know what products and services you need: Credit unions offer a wide range of products and services. Some of these will be important to you, and others you may simply never need. These services can include checking, savings, IRAs, mortgage loans, money market, certificates, auto loans, credit cards, online banking, and financial planning to learn how to get a loan from a credit union and manage debt.
2. Consider a local credit union or one with online banking and cooperative ATMs: Some credit unions have branches across the country, but perhaps not in your neck of the woods. As long they offer online banking with electronic scan deposits for your mobile device, as well as cooperative ATMs, you can still do business with them. On the other hand, you may prefer to choose a credit union with face-to-face interaction that you can only receive from a community branch.
3. Ask about any fees for any products and services you will use: Credit union fees tend to be lower than the fees accrued through traditional banks; however, you should be aware of any individual fees and how those are to be paid (through an automatic debit, added to credit card balance, etc.).
4. Learn the location of ATMs that accept the credit union’s debit card with no hidden fees: Not all ATMs will allow you to withdrawal cash without incurring a fee. Check with the credit union about the availability of cooperative ATMs in your area. It is advisable to call the credit union in advance before traveling to find no-fee ATMs while on vacation.
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Can Anyone Join a Credit Union?
When choosing a credit union that will serve you and your family, you need to take into consideration the other members in a particular credit union, as not all credit unions are open to anyone. The majority of credit unions only service people from a specific organization, association, groups or area. Some credit unions only cater to certain employers; however, as the need for more credit unions increase, one credit union may service members from several employers.
If you do not belong to any groups or organizations that have their own credit union, it is possible to find credit unions open to anyone. Some establishments may have names that make you think they only accept that group, but other individuals may join. The credit unions may ask you to join an organization in order to gain access, like Alliant Credit Union, who asks all non-Chicago residents to contribute $10 to the Foster Care to Success fund. The following are a list of several credit unions you may be eligible to join:
- Fort Knox Federal Credit Union
- Pentagon Federal Credit Union
- American Heritage Federal Credit Union
- Digital Federal Credit Union
- Alliant Credit Union
- Connexus Credit Union
- Consumers Credit Union
- NASA Federal Credit Union
- GTE Financial Credit Union
- State Department Federal Credit Union
Low-income credit unions are those with the majority of its members qualifying as low-income. This designation provides the credit union with additional funding to help its members, so certain credit unions are open to anyone. According to MyCreditUnion.gov, the additional funding is available from:
- Non-member deposits
- Secondary capital accounts
- Participating in the Community Development Revolving Loan Program
This amendment from the Federal Credit Union Act helps low-income members and their credit union to thrive.
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How to Join a Credit Union
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Once you have chosen a credit union that you are either eligible to join or one that accepts anyone, you will need to officially open an account. If you are already eligible, you can join a credit union online by completing an online form. Some credit unions ask for a small deposit to be made into a savings account upon opening. The deposit amount will vary between locations but could be as low as $5 to get you started.
Other credit unions that accept members outside of their organization may request that you contribute to a cause the credit union upholds. This fee can range between $5 and $20 depending on the cause, but this makes credit unions open to anyone possible.
When you apply for membership, you will be asked to verify your identity and provide personal identification information such as your Social Security number. Joint owners may also have to provide this information to authorize the credit union to obtain a consumer credit report. Depending on the credit union, you may need to be age 18 or over to apply online; however, a local branch can help you if are under 18.
How to Get a Loan from a Credit Union
Typically, getting a loan from a credit union is less of a hassle than securing one through a bank, but how to get a loan from a credit union when you are a new member? Since the credit union is a not-for-profit, you should be offered lower rates and fees with the best loan amount available. A community credit union is more likely to take your personal circumstances into consideration before making a decision.
Once you are a member for a while, the chances of securing a loan is greater than if you just joined a credit union. Depending on the credit union, you can apply in person or online. Either way, you will need to prove your credit worthiness, most likely with your credit score. The credit union may also base its decision on your consistent income, so try to maintain a direct deposit if possible to get a loan from a credit union.
If you are in the process of building your credit or rebuilding your credit after bankruptcy, bear in mind you may be required to have a co-signer before the loan is approved.
Credit unions may offer the following loans:
- Mortgages
- Equity
- Auto
- Motorcycle, boat or collateral
- Student loans
- Personal loans
You will need to research and compare the products and services offered by your credit union before applying for one particular type of loan. Find a credit union offering free personal financial counseling from staff members in-person, over the phone, and online.
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When You Want More Information
If you want to know more about how to join a credit union and the products and services they offer, you can find several sources online. Pocket Cents provides consumers of all ages information about credit unions and finances. The site offers information on:
- Buying a car
- Credit reports and scores
- Managing debt
- Mortgage options
- Payday loans
- Preventing identity theft
- Saving for college
MyCreditUnion.gov offers a special resource for service members, including veterans, and explains specific protections. If you are the parent of a teen or tween, the site can help educate your children on financial habits so they can save for college or start a business.
Whether you need to know more about how to find a credit union or how to get a loan from a credit union, a detailed answer is only a click away.
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