7 Questions to Ask Before Joining a Credit Union
As a not-for-profit, member-owned financial cooperative, the primary function of a credit union is to serve its members. Similar to the function of a traditional bank, credit unions offer various types of banking services including checking, savings, and loans.
Making decisions about personal financial health and well-being is important to all of us and can sometimes be difficult. With so many options, benefits, and advantages available, your choices may seem overwhelming and confusing. The following information will allow you to gain some clarity as you determine whether a credit union is the right financial institution for you.
1. How Do I Join a Credit Union?
Since the mutual goal of a credit union’s membership is to ensure the financial well-being of all of its members, participants have some type of common bond. There are several common ways to find membership in a credit union:
- Geographic location: some credit unions place membership boundaries based on living, working, worshipping or attending school in a particular area
- Employer-sponsored program: some employers offer credit union membership as an employee benefit
- Association with or membership in a group such as a school, nonprofit organization, or military service
- Family: if an individual belongs to a credit union, or meets the eligibility requirements of membership, eligibility to join may be extended to that person’s immediate family members.
If you qualify under one of these categories, you can apply for membership in a credit union. The typical cost to establish a membership account is low. Some credit unions have application fees, but many allow you to join with no fee, and minimum deposits generally fall between $5 and $25.
2. Is a Credit Union a Safe Place for My Money?
Credit unions have insurance on member deposits and are certainly safe places to keep your money. Similar to how deposits in a traditional bank are covered by the Federal Deposit Insurance Corporation (FDIC), deposits in a federally insured credit union are covered by the National Credit Union Administration (NCUA). Credit union deposits are insured up to $250,000 per member by the National Credit Union Share Insurance Fund (NCUSIF), which is backed by the full faith and credit of the United States government.
3. What Should I Know About Checking and Savings Accounts at Credit Unions?
Checking and Savings accounts are often called “share accounts” at a credit union. Share savings accounts pay dividends, similar to interest, while checking (“share draft”) accounts are used for everyday spending. Before becoming a member, ask the credit union about any minimum balance requirements or transaction limitations. Other important questions to ask include availability of funds after deposit, and if there are any fees associated with the accounts and services you’re interested in using.
4. Is My Credit Union Up-to-Date with Technology?
You may be surprised to find that many credit unions offer the same electronic services that you would expect from a bank. But all credit unions differ, so it is important to check on the availability of technology that is important for you. For example,
- Does the credit union offer online banking and a mobile app, and are there any associated fees?
- How accessible are ATMs, and are there fees associated with ATMs not connected with the branch? Will the credit union reimburse fees charged by out-of-network ATMs?
- Does the credit union offer notifications via e-mail or text message to alert of account changes or transaction activity?
- Does the credit union offer bill pay, and are there any fees or limitations? Can you pay bills with the mobile app?
5. What Are the Current Interest Rates at Credit Unions?
Because credit unions return profits to members, you will typically find better dividend rates on savings and lower interest rates on loans when compared to those offered at traditional banks. Still, it is a good idea to shop around and compare rates before committing to a loan or savings product. Many credit unions will provide you with a quote of your eligible rates based on your credit score.
6. What Products Do Credit Unions Offer?
As financial institutions, credit unions can offer various types of personal and business banking services including:
- Checking Accounts
- Savings Accounts
- Debit Cards
- Secured Loans, including auto loans, home equity loans and lines of credit, and mortgages
- Unsecured Loans, including credit cards, personal loans and lines of credit, and student loans
Because of slim profit margins, credit unions can offer more products at more competitive rates than banks.
7. Are There Any Non-Banking Benefits of Credit Union Membership?
By the very nature of a credit union, cooperation and thrift are important values. Therefore, membership often includes benefits that cover more than just banking products. Benefits of a credit union membership may also include:
- Discounts and special offers through partnered companies, such as club memberships, phone plans, and insurance products
- Notary signature service
- Identity theft protection service
Of course, these optional benefits are just added perks to the advantages already gained from participating in a credit union with member-focused values and service.
Your next personal finance choices
Whether your financial goal is to move your funds to a credit union or to enhance your existing financial well-being with added benefits, you should now be well-equipped to make the right decision for your specific financial needs.
We Bank on Relationships
If you have ties to Lancaster, you’re likely eligible to join our family of member-owners! Lanco FCU is a not-for-profit financial institution owned by our more than 10,000 members. Because we’re in business to benefit our members (not shareholders), we return excess earnings through benefits including competitive rates on deposits and loans, free rewards programs, free convenience services, low fees, and so much more. Become a Lanco FCU member and enjoy the benefits of your local credit union.
If you want to further review how to find the right credit union for you, explore our infographic here.