The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
Credit unions are known to be more stable than banks, and more generous when it comes to supplying customers with favorable interest rates on their deposits. They’re able to do this because, unlike traditional banks, they don’t rely on a fractional reserve system (meaning the bank reserves just a fraction of cash and other liquid deposits) when it comes to the possession of available funds. Instead, credit unions act as non-profit cooperatives, and all of the money deposited in a credit union stays within the institution for the sole use of its customers. In addition, credit union members gain partial ownership of the organization upon joining.
While credit unions are more financially sound than many other lending entities, some credit unions are better than others for different reasons. What should you look for when choosing a great credit union? The experts weigh in.
[Related: The Move Your Money movement: Should you bail on big banks?]
1) Choose a convenient institution. Dan Egan, president of the Massachusetts Credit Union League, stresses that this is the first thing that one should look for when vetting a potential institution. Most traditional banks have readily accessible ATMs and satellite branches covering metropolitan areas. Credit unions do not have this luxury. For this reason, you should look for a credit union that provides ATM services, or a branch network that is local to your area. Also make sure that the institution you choose has reliable online banking — and even mobile banking — services.
2) Look for great programs. According to Egan, you want to make sure that your credit union offers home lending services, issues credit and debit cards, provides auto loans, features a good savings program, and offers financial counseling. “You want to be able to [access] all your financial services in one-stop shopping,” says Egan.
3) Find a credit union that fits your needs. Credit unions are most often established by members of proprietary groups. That is, there are credit unions in which only members of the military, employees of a specific company, or residents of a certain community can join. Ben Rogers, Research Director of the Filene Research Group, says that credit union members have more success at institutions that cater specifically to their lifestyle needs. “Military members are likely to get better service from a military credit union, because the credit union understands that lifestyle and caters to those members’ financial needs. The same holds true for some profession-focused credit unions like municipal employees, realtors, or large company retirees,” he says.
4) Shop around for the best fees. Although credit unions generally provide better rates than banks, don’t assume that the credit union you have your heart set on joining has outperformed your bank in this area year over year. “It always pays to shop around, especially if you have more than one credit union you might join,” says Egan.
If you want to find a great credit union in your area, visit FindACreditUnion.com or ASmarterChoice.org for more information. When choosing a credit union over a bank, you may be doing your part to help the local economy. “Credit unions have really become the organic financial institutions in our financial service marketplace right now. They’re locally grown, locally owned, and are the best options for people on a local basis,” says Egan.
June 14, 2023
Credit 101
January 25, 2022
Credit 101
February 19, 2021
Credit 101