For years friends and business colleagues have spoken positively about their local credit unions (or major credit unions that they can otherwise access like PenFed, Navy or Alliant). Many people like to work with a not-for-profit organization, owned by members as opposed to shareholders, that is locally run (and can show more flexibility on policies and lending requirements). Perhaps more importantly, credit union savings and CD rates and lending rates are often superior to those at banks and online banks.
For those used to dealing exclusively with banks, the most important thing to understand is that credit unions, like banks, are federally insured financial institutions that provide banking services and loans for their members. While banks are FDIC-insured, credit unions are insured and regulated by the National Credit Union Administration (NCUA). NCUA insurance basically mirrors the terms of FDIC insurance, and BestCashCow strongly recommends that customers of both banks and credit unions maintain deposit levels within insured amounts.
One prevailing myth about credit unions is that you need to be a member of a certain class or work for a certain company to join a credit union. This myth is no longer true. Credit unions have been dramatically expanding their charters so that anyone who lives or works in a certain area or joins an organization can become a member. You can easily see what the membership requirements are for any credit union by reading the Field of Membership entry on a credit union’s page on BestCashCow, or by clicking on Restrictions in any rate table in which that credit union’s rates appear. The dramatic expansion of charters by credit unions is being contested in court by the banking lobby.
Another concern that people have about credit unions is that they lack the product breath or footprint of banks. Those who compare rates from credit unions and banks, however, will find that credit unions are just as likely to offer competitive 5-year CD rates as they are to have great 30-year mortgage rates. They will also find credit unions that have locations and ATM access (or ATM access agreements) that make it convenient to bank there. See all credit union locations near you here.
Whatever you circumstances, there are now more reasons than ever to take a closer look at credit unions. What finally prompted me to open a credit union account was when I learned that a credit union near me was giving its members free access to certain museums and theaters. Please write in the comment section below what you like most about your local credit union.