what is a credit union?
A credit union is a business where you can deposit cash, start a savings account, or take out a loan.
"Huh, sounds kinda like a bank to me."
Credit Unions look and smell a lot like banks but, in fact, are founded on very different principles. Credit unions are cooperatives. This means that instead of being a customer, at a credit union you are a member. As a member you are part owner and have the right to vote for the board of directors (who are also members of the credit union).
As a membership organization the credit union will have some criteria for joining. But don’t worry, it’s usually as simple as living or working in the area where the credit union operates. Some credit unions may limit membership to certain trades--like a teachers credit union, for example. But most have broadened their membership criteria so make sure you read the fineprint. You might not have to be a teacher to join your local teachers credit union or a firefighter to join the firefighters credit union.
To become a member you will likely have to pay a low one-time membership fee. (This is can be as low as $15 to $25.) The plus side to being part of a cooperative is that you will likely receive more personalized attention and better service. Credit unions are non-profits. That's pretty cool because it means that the credit union uses any money it makes to reinvest in their members (that’s you!). They usually do this by offering lower fees and low-interest loans. Unlike banks which invest your hard-earned cash in other businesses (like big oil and private prisons) in order to make money for their stakeholders.
As small businesses, credit unions don’t have as many locations or ATMs as big banks. But most offset this disadvantage by offering fee reimbursement for out-of-network ATMs. Some belong to ATM networks that provide low or no-fee ATM access nationwide.
Some other things you’ll want to know about credit unions:
Just like with banks your money is insured up to $250,000. Instead of being insured by the FDIC (Federal Deposit Insurance Corporation), credit unions are insured by the NCUA (National Credit Union Administration).
Most credit unions offer online banking. However apps like ApplePay might be harder to access through a credit union.
Do your research! All credit unions will have different offerings and fees. Check out Asmarterchoice.org for help finding a credit union that fits your needs. Or Nerdwallet’s Best Credit Unions of 2018.
Some credit unions worth checking out:
Alliant Credit Union: Popular for its high APY (annual percentage yield) and nationwide fee-free ATMs. Open to employees of certain businesses.
Golden1 Credit Union: Free checking and savings accounts. Open to all residents of California.
Connexus Credit Union: Open to residents of some areas of Minnesota, Wisconsin, and Ohio, employees of select businesses, and charitable donors.
Municipal Credit Union: Open to NYC employees and NY state employees who work in New York City, CUNY students and students at private colleges in NYC.