Credit unions represent a popular way to reach your financial goals and build wealth and stability for yourself and your family. They operate like banks and offer most of the similar services, but in a warm and friendly environment. It’s fairly easy to become a member of a credit union. So keep reading as we consider the added local benefits of becoming a credit union member.
What is a Credit Union?
A credit union is a non-profit financial institution that is owned by its customers (who are called members). Once you join a credit union, you can open savings and checking accounts, and also obtain loans and credit cards. Some credit unions offer investment services as well. However, because credit unions are owned by their members, its policies and programs are focused on making its members’ lives better.
The Benefits of Joining a Credit Union
Some of the advantages of joining a credit union include:
Lower Loan Rates and Fees
Credit unions provide attractive rates on its credit products such as mortgages, car loans, and credit cards. These institutions also provide fee-free checking and savings accounts. Furthermore, there are no minimum balance requirements.
Easy Qualification Standards
If you don’t have a great credit history, you will likely have problems getting a loan at a low rate. But credit unions tend to be more lenient and focus on a person’s ability and willingness to pay their bills on time.
Personalized Credit Assistance
Even if you have a poor credit rating, your credit union can help. Most of them have certified credit counselors who can guide you through getting out of debt and improving your credit score.
Higher Returns on Savings Accounts
Credit unions also tend to offer attractive interest rates on savings and deposit accounts. Furthermore, these accounts provide a haven for your funds as almost all credit unions are federally insured by the NCUSIF which is backed by the US government. The NCUSIF is managed by the NCUA, a government agency. Therefore, all federal credit unions are covered by the NCUSIF for up to $250,000 per depositor per qualified account.
A part of the mission of your credit union is to educate its members on matters of financial literacy. Their financial advisors provide guidance about money and credit matters to help members create a stable foundation for their families.
A Good Community Presence
A credit union provides valuable services to the community. Such institutions often conduct community outreach like scholarships, educational, and health programs. By becoming a member of a credit union, you become a part of the force for positive change in your community.
Some Challenges of Credit Union Membership
While there are many benefits to credit union membership, there can be some challenges:
- Limited branches: Some smaller credit unions will have fewer branches. However, larger credit unions tend to have several.
- ATM availability: Credit unions may have limited ATM coverage. However, several credit unions have agreements in place that allow their members to use an ATM to withdraw and deposit funds.
- Limited plastic options: Some credit unions may not have credit cards (although they may have prepaid cards attached to accounts). But some credit unions like Riegelwood FCU, also have credit cards.
- Exclusive membership: Joining a credit union may require that you’re a part of a certain community or profession. But the good news is that there are many credit unions around, so you will likely find one that you can join.
Questions You Should Ask Before Joining a Credit Union
The main focus of any credit union is to serve its members well. They also offer traditional banking services like savings and checking accounts. However, you need to do your due diligence to make sure that you’re signing up with a credit union that will serve your best interests.
Here’s a list of useful questions that you should get answered before you join a credit union:
How Do I Join This Credit Union?
Credit union members often share some common bond such as:
- Geographic location: Some credit union membership is determined by a person living, working, or attending school in a given area.
- Employer-sponsored program: Some large scale employers may offer credit union membership as a part of its employee benefits.
- Association: A credit union may reserve membership for persons who are a part of a religious organization, school, non-profit organization, or military service.
- Family ties: If someone belongs to a credit union, membership may also be extended to his/her immediate family members.
Joining a credit union doesn’t cost much. Some credit unions may have application fees, while many may allow you to join minus any fees. However, you’ll need to make a minimum deposit to open your share account and that amount often varies from $5 to $25.
Are the Deposits in This Credit Union Insured?
Many credit unions have insurance on their members’ deposits. Just as regular bank deposits are protected by the FDIC, the National Credit Union Administration (NCUA) also insures deposits in federal credit unions. These deposits are insured for up to $250,000 per member per account class/type by the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF is also fully backed by the US government.
However, not all credit unions are federal ones. These other credit unions will likely have other insurance in place. If you choose to go with one of these other credit unions, then get a lot of details about their insurer and how that coverage applies to its members.
How Do Your Savings and Checking Accounts Operate?
Savings and checking accounts are usually called “share accounts” at credit unions. Share savings accounts pay dividends (similar to interest) while checking (or share draft) accounts are used for everyday spending.
Before you become a member, get information about the minimum account balance requirements and/or transaction limits. You should also be clear on how soon your funds are available after deposits, and if there are fees associated with the accounts you’re interested in.
Does This Credit Union Offer Banking Technology?
A lot of credit unions offer the same electronic services as a bank would. However, you should always check on this technology availability aspect. You need to know:
- Are there any online banking and mobile apps available?
- Are there any fees to access these technology services?
- What ATMs are available?
- What are the fees to use ATMs not connected to the credit union?
- Will this credit union reimburse fees charged by out-of-network ATMs?
- Are there any email notifications or text message alerts about account changes or transaction activity?
- Is bill payment offered?
- Are there any fees to use this bill payment service?
- Is this bill payment feature available on mobile devices?
What Are Your Current Interest Rates?
Since credit unions return their savings to their members, you will find more attractive dividend rates on deposits. Also, interest rates on loans tend to be lower.
However, you should always ask about rates and shop around to compare (like you would against traditional banks). Many credit unions may give you a quote of your eligible rates based on your credit score. But unless you’re going to take a loan soon, you should probably avoid any pulling of your credit rating.
What Products Are Offered to Members?
Credit unions may offer an array of products. However, this selection will vary from one credit union to the next and may also be influenced by its members’ needs. They could include:
- Checking accounts
- Savings accounts
- Debit cards
- Secured loans such as auto loans, home equity loans and lines of credit, and mortgages.
- Unsecured loans such as credit cards, personal loans and lines of credit, and student loans.
Due to their small profit margins, credit unions may be able to offer more products at more competitive rates than the average bank.
Are There Any Non-Banking Benefits to Joining This Credit Union?
Cooperation and thrift are essential components of a credit union. So membership may also yield additional non-banking benefits such as:
- Discounts and special offers through partner companies. These may include club memberships, phone plans, and other essential services.
- Notary signature service
- Identity theft protection
These are just a few of the many non-banking benefits that you may enjoy. And you should bear in mind that these are just extra benefits to the many advantages of credit union membership.
Enjoy the Benefits of Credit Union Membership!
There are many added local benefits of becoming a credit union member. Regardless of your financial goals, joining a credit union is a great choice. Riegelwood Federal Credit Union is your best option for your saving, checking, investment, and loan needs. We help create and maintain a future of financial stability and growth for you and your family. So let’s talk to see how we can help you achieve all your financial goals and enhance your current wellbeing.