These credit unions represent some of the best institutions overall, but there may also be local winners in your community. Research if there’s a credit union or bank near you that offers low fees and gives you a good return on your money.
Can I use both a credit union and a bank?
Yes. There’s no rule that says you can’t keep some money at a credit union and some at a bank. It’s possible to use both services at the same time.
Are online credit union accounts different from in-person credit unions?
Online credit unions generally offer the same products and services as credit unions that have branches. You can typically deposit checks, pay bills, review your transactions and transfer money to your other accounts or to friends and family. If you live close to one of your credit union’s branches, you can get help there, too, but being able to transact online is especially handy if you’re not near one.
Are the best credit unions also the biggest?
Not necessarily. Some of the biggest credit unions have similar advantages to banks, including highly rated mobile apps and wide ranges of financial products. But you might get more personalized service at a small, local credit union. And some credit unions belong to the Co-op network, meaning you can bank at more than 5,000 credit union branches across the country and use more than 30,000 ATMs — that’s a larger ATM network than many banks have.
Don’t count out your local credit union when searching for a financial institution.
Is the money in credit union accounts safe?
Yes. Like the Federal Deposit Insurance Corp., which handles banks, the National Credit Union Administration insures customers’ deposits in case a credit union fails. All federally chartered credit unions must carry NCUA insurance. It covers credit union members’ deposit accounts: checking, savings, and money market accounts, as well as share certificates. The NCUA insures up to $250,000 per depositor, per institution, per ownership category. “Ownership category” refers to account types such as single (owned by one person) or joint (owned by two or more people).
» MORE: Learn how NCUA insurance works
How can I find a local credit union?
If you’re in the market for a credit union, and you’d like to be able to visit a branch, check out the NCUA’s credit union locator. Just note that if you’re comfortable with banking online, you can choose one of the top five credit unions mentioned above that have wide eligibility, almost no matter where you live.
Do the best credit unions pay more interest than banks?
Credit unions have a reputation for paying more interest than banks, and it’s often well-deserved. According to the most recent data from the National Credit Union Administration, credit unions pay higher average rates on money markets and all surveyed certificate terms.
But it's not hard to find an online bank that pays higher rates on savings and checking than the average credit union.
If you’re comparing your credit union with big, brick-and-mortar banks, the credit union’s rates will probably come out on top. But if you’re comparing it with an online bank, the competition might be tougher.
» Interested in comparing? See NerdWallet's picks for best online banks
Do credit unions build credit?
Individual credit scores come from a mixture of the following: the number of loans or credit card accounts you have, the number of on-time payments you’ve made, the percentage of your overall credit limit that you’re using, the number of hard credit checks that have recently been made for you, the derogatory marks (like bankruptcies or foreclosures) made against you and the age of your credit history.
To this end, you can build your credit by taking out a mortgage, auto loan, student loan, personal loan or credit card with a credit union.
Do credit unions check your credit?
When it comes to getting a loan, a lender will typically pull a credit report on you, whether it’s a bank, a credit union, an online lender or another type of company. But for checking and savings accounts, policies vary. It’s more common for financial institutions to pull up your report throughreporting companies such as ChexSystems, which records information such as past bounced checks and overdrafts, and Early Warning Services which collects information on banking activity and history.
The only sure way to find out which reports your credit union pulls when deciding to approve you for membership or products is to ask.
» Learn more about how to clear your ChexSystems report
Do credit unions have ATMs?
Yes, credit unions usually have their own ATMs and they often belong to a network of ATMs that customers can use to withdraw and deposit cash. These networks usually provide nationwide access to fee-free services at tens of thousands of ATMs.
Are there any downsides to credit unions?
Membership requirements. Credit unions have membership requirements and sometimes the requirements are too exclusive for the average person, like some military credit unions for example. However, there are cases where a potential customer can do something as easy as make a small donation to a partner charity to gain membership to a credit union.
Limited branches. Many credit unions are limited to local, state or regional areas, which means in-person customer service can be hard to get, especially when traveling. To avoid this limitation, consider a credit union that participates in a shared branch and/or shared ATM network. The Co-op network, for example, offers access to more than 30,000 fee-free ATMs across the U.S., and more than 5,000 branches.
Might not be as up to date on technology. Some credit unions may be behind the curve with their desktop and smartphone app designs, offering only bare-bone services. Make sure a credit union has the services you want (such as mobile check deposit) before you open an account.
Services may be more limited. Smaller credit unions might not have the variety of services and products that larger banks do, so before you open an account, be sure your credit union has all of your preferred features.
Credit union terms you need to know
Credit unions and banks both have checking accounts and both pay interest on savings accounts, but they might call those products by different names. Here are a few credit union translations.
Dividend: Another word for interest paid by a credit union.
Shared branches: A shared branch network allows members of one credit union to visit branches of another credit union that are within the same network, such as the Co-op Shared Branch network.
Share certificate: Credit unions typically use this term to refer to certificates of deposit.
Share draft account: Another term for a checking account. Some credit unions also call checks “share drafts.”
Introduction
As an expert in the field of credit unions and banking, I can provide you with comprehensive information on the concepts mentioned in the article you shared. I have extensive knowledge and experience in this area, which I will use to address your questions and provide you with valuable insights.
Can I use both a credit union and a bank?
Yes, you can absolutely use both a credit union and a bank. There are no rules that prevent you from keeping money in both types of financial institutions. In fact, many people find it beneficial to diversify their accounts and take advantage of the unique benefits offered by each. By using both services, you can enjoy the advantages of credit unions, such as personalized service and potentially higher interest rates, while also benefiting from the convenience and accessibility of traditional banks.
Are online credit union accounts different from in-person credit unions?
Online credit unions generally offer the same products and services as credit unions with physical branches. You can typically perform various transactions, such as depositing checks, paying bills, reviewing transactions, and transferring money, through online platforms. However, if you live close to a physical branch, you can also visit it for assistance. Online access is particularly convenient if you are not located near a branch, as it allows you to manage your accounts from anywhere.
Are the best credit unions also the biggest?
Not necessarily. While some of the largest credit unions may offer advantages similar to those of banks, such as highly rated mobile apps and a wide range of financial products, smaller local credit unions can provide more personalized service. Additionally, some credit unions belong to the Co-op network, which allows you to access services at more than 5,000 credit union branches and over 30,000 ATMs nationwide. This extensive network often surpasses the ATM availability of many banks. Therefore, it's important not to overlook local credit unions when searching for a financial institution.
Is the money in credit union accounts safe?
Yes, the money in credit union accounts is safe. Just like banks are insured by the Federal Deposit Insurance Corporation (FDIC), credit unions are insured by the National Credit Union Administration (NCUA). All federally chartered credit unions are required to carry NCUA insurance, which covers deposit accounts such as checking, savings, money market accounts, and share certificates. The NCUA insures up to $250,000 per depositor, per institution, per ownership category. This means that your funds are protected in case a credit union fails.
How can I find a local credit union?
If you're interested in finding a local credit union, you can use the NCUA's credit union locator tool. This tool allows you to search for credit unions in your area and provides information on their services and eligibility requirements. However, if you prefer online banking and are comfortable with digital transactions, you can also consider the top five credit unions mentioned in the article, as they often have wide eligibility requirements regardless of your location.
Do the best credit unions pay more interest than banks?
Credit unions have a reputation for paying higher interest rates than banks, and this reputation is often well-deserved. According to the National Credit Union Administration, credit unions generally offer higher average rates on money market accounts and certificate terms compared to banks. However, it's worth noting that some online banks may offer even higher rates on savings and checking accounts than credit unions. When comparing rates, credit unions often outperform traditional brick-and-mortar banks, but online banks may provide stiffer competition. It's always a good idea to compare rates and offerings before making a decision.
Do credit unions build credit?
Credit unions can indeed help you build credit. Your individual credit score is influenced by various factors, including the number of loans or credit card accounts you have, your payment history, credit utilization, recent credit checks, derogatory marks, and the age of your credit history. By taking out a mortgage, auto loan, student loan, personal loan, or credit card with a credit union, you can establish a positive credit history and improve your credit score over time.
Do credit unions check your credit?
When applying for a loan, credit unions, like other lenders, typically pull a credit report to assess your creditworthiness. However, policies may vary when it comes to checking and savings accounts. Financial institutions often use reporting companies like ChexSystems or Early Warning Services to gather information on banking activity and history, rather than pulling a traditional credit report. To determine which reports your credit union uses for membership or product approval, it's best to directly inquire with them.
Do credit unions have ATMs?
Yes, credit unions usually have their own ATMs, and many also belong to ATM networks that provide nationwide access to fee-free services. These networks allow credit union members to withdraw and deposit cash at tens of thousands of ATMs across the country. Therefore, you can enjoy the convenience of accessing your funds without incurring additional fees.
Are there any downsides to credit unions?
While credit unions offer numerous benefits, there are a few potential downsides to consider:
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Membership requirements: Some credit unions have specific membership requirements that may be exclusive or limited to certain groups, such as military personnel. However, there are cases where potential customers can gain membership by making a small donation to a partner charity.
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Limited branches: Many credit unions have a limited presence, often serving local, state, or regional areas. This can make in-person customer service challenging, especially when traveling. To overcome this limitation, consider choosing a credit union that participates in a shared branch and/or shared ATM network, such as the Co-op network, which provides access to thousands of fee-free ATMs and branches nationwide.
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Technological advancements: Some credit unions may lag behind larger banks in terms of technological advancements, offering basic desktop and smartphone app designs with limited features. Before opening an account, ensure that the credit union provides the services you desire, such as mobile check deposit or other digital banking features.
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Limited services: Smaller credit unions may not offer the same variety of services and products as larger banks. It's important to ensure that your preferred features, such as specific types of loans or investment options, are available before committing to a credit union.
Credit union terms you need to know
Here are a few credit union terms that you may come across:
- Dividend: This term is used interchangeably with "interest" in the context of credit unions. Credit unions often refer to the interest paid on accounts as dividends.
- Shared branches: A shared branch network allows members of one credit union to visit branches of another credit union within the same network. The Co-op Shared Branch network is an example of such a network.
- Share certificate: Credit unions use this term to refer to certificates of deposit (CDs), which are time deposits with fixed terms and interest rates.
- Share draft account: This term is another way of referring to a checking account. Some credit unions may also use the term "share drafts" to refer to checks.
I hope this information clarifies the concepts mentioned in the article and provides you with a deeper understanding of credit unions and banking. If you have any further questions, feel free to ask!
