What’s a Credit Union and How Can You Find the Best One?

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Learn the differences between banks and credit unions, as well as the benefits of joining a credit union.

Like many people, you’ve probably heard about credit unions but may still feel left in the dark when it comes to truly knowing what they do and how they’re different from a bank. It seems like everyone has at least one friend who belongs to a credit union and raves about the benefits, swearing off banks for good, but is it all hype? Does it simply depend on finding the best one?

The underlying difference between banks and credit unions is that banks are for-profit entities, whereas credit unions are not-for-profit. Credit unions strive to serve their members with lower-interest-rate loans and higher savings rates. They are known for having much more attentive customer service because their profits are returned to the members who share in the ownership, creating more of a feeling of community.

Alternatively, banks return their profits to shareholders, and because customers do not have ownership in the corporation, a great majority of banks comparatively lack in customer service and tend to have more fees to turn a profit for their shareholders.

You might be wondering why anyone would go with a bank if this is the case, but consider that major banks have thousands of branches and ATMs accessible across the country. Credit unions decidedly lack in this area and have limited branches, which can be inconvenient if you travel. If you aren’t a traveler and tend to stay close to where your desired credit union has most of their branches, then it’s time to look at which is the best one for you.

How to Find the Best Credit Union

Many credit unions limit their eligibility for membership to specific fields because the laws require them to have a defined field of membership to retain their non-profit status. The guidelines can be broad and are usually based around a shared bond between members like sharing the same church, school, community, employer, or employee group. 

However, if you find a credit union you like with branches near you and your position doesn’t meet the membership guidelines, there are some credit unions that will typically grant you a membership if you make a small donation.

Your first step in finding the perfect credit union for your banking needs should be by asking your friends, coworkers, and other networks. Credit unions with a branch near you will have members that you are likely friends or acquaintances with, so start by asking them if they have a good experience with their credit union and if they would recommend becoming a member. If you don’t know anyone who belongs to a local credit union, you can search the National Credit Union Administration’s (NCUA) database.

These days, credit unions located near you will have their own websites, which you can easily find with NCUA’s convenient database. Online, you can get an idea of what services these credit unions offer, who is eligible for a membership, what fees they may charge, and their interest rates. 

It’s best to start local. That way, if you have any questions you can seek out more information at a branch near you. One of the many reasons why people join credit unions is for the customer service and the relationships you form with the people who work there. Credit unions offer a closer sense of community, an advantage that they have over big-name banks.

But if you can’t find a credit union you want to join with branches near you, there are credit unions you can become a member of by simply signing up online. These types of credit unions are nice because you aren’t limited to what’s nearby and there are plenty of big credit unions that have a strong online presence for a broader, more inclusive membership, while also having physical, brick-and-mortar branches throughout the United States. You may not live near one of these branches, but if you do travel often there’s a good chance a branch will be in a major city.

The Best Credit Unions Where Anyone Can Become a Member

We all live in geographically dispersed locations, so it’s impossible to advise on the hundreds of local credit unions where you are eligible to become a member. But for online credit unions, it’s a different story. With these top-ranking credit unions, anyone can join. 

Whatever position you find yourself in: a student, a member of the military, a farmer, a teenager, or just a regular Joe, there’s a credit union out there that perfectly fits your needs. Although it may not be close by, joining most of them is just a click away.

Alliant

Reliably top-ranking, Alliant Credit Union is renowned for its high-rate checking that earns 0.65% annual percentage yield (APY) if you receive e-statements and have at least one electronic deposit per month - pretty easy criteria to enjoy these perks, right? Alliant’s savings account can earn you 2.10% APY on balances of $100 or more, which is yet another reason to join this credit union. 

You are eligible to join Alliant Credit Union with a $5 donation if they don’t directly employ you or if you don’t live near their Chicago headquarters. Alliant has over 80,000 ATMs nationwide, all of which are fee-free.

Connexus

For superior checking account perks, there’s no better credit union than Connexus. You can apply for membership if you join the Connexus Association, an affiliate charity that provides scholarships and helps support education, and there is a one-time $5 joining fee. Joining Connexus means you can enjoy the perk of a 1.75% APY on balances up to $25,000, and a reimbursement of up to $25 for ATM fees when you meet their four account activity requirements.

First Tech

If you prefer access to a physical branch, then First Tech is for you. This credit union has one of the largest number of branches across the United States (40 branches in 9 states and can even be found in Puerto Rico). It’s a tech-based credit union, with its initial founding at Tektronix, a technology company, but these days you can find its branches in just about any city that has a thriving technology industry. With a First Tech Credit Union membership, you will have access to 30,000 ATMs and some 5,000 of its financial institutions. You can apply for a membership if you are a member of the nonprofit group Financial Fitness Association, which costs $8, or if you are an employee of a sponsoring company, an employee of the state of Oregon, or if you live in Oregon’s Lane County.

Credit unions are an excellent (and sometimes better) financial alternative to big name banks. If you are looking at superior customer service and better perks for checking or savings accounts, then a local credit union could be the best solution for you. It is easy to join a credit union if you fall into their terms of eligibility, such as being an employee, being in a certain age group, or retaining a membership in a social club.

Start by asking around, then go online to expand your options. You may be surprised to find what kind of perks are in store for you by becoming a member at a credit union.