Credit unions are member owned. As a result, profits are returned to members in the form of lower rates on loans and higher earnings on savings. To be eligible for a credit union though, there are membership requirements. For example, you might need to work for a specific employer or live in a certain community. About 92 million U.S. consumers belong to credit unions, according to the Credit Union National Association.
However, although credit unions offer competitive rates, they aren’t all created equal. It helps to have a few tips when selecting the right credit union for your personal situation.
Related: Check out our rundown of the best CD rates offered from credit unions.
Before selecting a credit union, ask about shared branching. Since credit unions are local, they don’t have a large branch network like national banks. However, some credit unions participate in shared branching because it allows members to use ATMs across the nation without incurring extra fees. You can even retrieve your account information and get assistance with transactions.
Credit unions don’t just offer financial services. They usually offer free education to members. This might include seminars, such as: debt assistance, boosting credit scores, making smart investing decisions and purchasing a home.
Credit unions conduct seminars themselves, or hire outside professionals to teach the courses. Ask potential credit unions how often they hold these events and the material covered.
Security and Protection
Identity theft is a huge problem affecting 9 million people annually, according to the Federal Trade Commission. Most credit unions have some level of protection, however, credit unions don’t all use the same technology.
For example, some have sophisticated technology that monitor the way you type in your login credentials. So, even if a thief types in the correct user name and password, they won’t type it in like you do.
Affordable Account Pricing
Avoid paying monthly fees by asking about free accounts. Some credit unions have several options to help you avoid a monthly service fee. For example, you might score free checking by automatically depositing your monthly check. Or, your maintenance fee might be waived by maintaining a specific balance or having an auto loan with the credit union.
Localized Decision Making
Centralized decision making happens at a corporate office. The office has a list of criteria and approves or denies your loan decision, based on the specific criteria. Some credit unions, however, have localized decision making. This means, a branch manager has more authority to look at your whole financial situation and make a decision, rather than fitting you into criteria.
If you plan to apply for a loan in the future, ask the credit union how loan decisions are made.