Credit unions provide nearly all the financial services that banks do. Unlike banks, however, credit unions are nonprofit organizations. As a result, they’re better placed to implement policies that are more customer-friendly. Compared to banks, credit unions offer higher interest rates on savings accounts, charge lower APRs for loans and are more willing to work with customers that have less-than-perfect credit.
In essence, you pay less in banking fees, earn more on your savings and pay lower interest when you take out loans. You also enjoy personalized banking services; meaning shorter wait times and more one-on-one time with your banker. These - and many others - are the benefits you enjoy when you bank with a credit union.
If you’re considering joining a credit union, here are some tips to help you find one that perfectly suits your needs:
Make Sure You’re Eligible
Credit unions are usually affiliated with local organizations like companies, schools or places of worship. As a result, you need to meet some laid-down criteria before you are granted membership. If you aren’t part of the organization that the credit union is associated with, you have to be related to a member. These days, credit unions are relaxing their rules and granting membership to outsiders, but you may need some members to stand as guarantors for you.
If your workplace, alma mater or religious institution isn’t connected to any credit union, the best place to start your search is among your family members/close friends. In addition to giving you the lowdown into how the union works, they can serve as your guarantors should you need one.
Be Sure They Provide the Services You Need
Find out about the credit union’s services and see if they provide the ones you need the most. If you’re joining a credit union because you want to earn more on your savings, ask them about their interest rates beforehand. Also, learn about their loan programs; how long do you need to be a member to access loans? Do they offer home lending services? What about auto loans? Don’t forget to ask about bank charges, and debit and credit cards.
If you are typically busy during the week, ask if they are open on the weekends. Also,if you think you may need retirement and estate planning in the future, make sure that they offer these services. The big national banks provide personal finance services but not all credit unions do. Ask about it.
Prepare a checklist of the financial services you need and find a credit union that meets all (or most) of them. Also, the longer you have an account at a credit union, the better the services and the more the benefits you enjoy. Picking one that meets your present (and potential future) needs increases your chances of longevity.
Ask About Branches and ATMs
A major advantage that national banks have over credit unions is a large network of branches and ATMs. Only the biggest credit unions have branches in different states. This begs the question: how will you maintain your accounts if you move away from your current city?
To solve this problem and compete favorably with the big banks, credit unions have an innovative solution. They collaborate with interbank networks like CO-OP Financial Services, AllPoint, or MoneyPass to provide customers with low/zero-fee access to ATMs. CO-OP, for example, has 30,000 connected teller machines in the US, Canada and on military bases abroad. Some unions aren’t part of these networks, but they allow customers to use any ATM they want and cover the surcharges.
While shopping for a credit union to join, ask them about branches and ease of withdrawal. Make sure the credit union you end up choosing provides easy and cheap access to ATMs.
Choose a Tech-Savvy Credit Union
In the past, credit unions lacked the technological tools that national banks offer their customers. They didn’t have online banking or mobile apps that allow customers to check their balances, pay bills or deposit checks online.
However, these days the tech industry has advanced considerably and there are a lot of third-party software vendors in the market. These companies help credit unions develop smartphone apps, web platforms and access points that facilitate online banking. If you leverage online services regularly, opt for a credit union that’ll provide you with the tools you need to do so with ease.
How Safe is Your Money?
All federal credit unions and most of the state-chartered ones are insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA). Each customer has coverage of up to $250,000 (across a group of accounts).
The federal insurance limit is the same for all financial institutions, be it national banks, community banks or credit unions. In other words, as long you choose a union that is backed by any of the above and stays within the federal limits, your money is safe.
When you find a credit union with all the features you need, find out if you’re qualified to join (or what you need to do to be qualified). Once you are cleared to join, you’ll need an initial fee (usually lower than $25) to purchase one par value of a share. This amount will remain in the account throughout its lifespan.
Over the past few years, credit unions have ranked higher than commercial banks when it comes to customer satisfaction. Because of this and other benefits - like lower fees, more people are moving their businesses to these financial organizations. In fact, over 80% of credit unions do not charge monthly fees for checking accounts. It shouldn’t be hard for you to find one that suits you perfectly.