Credit unions just sound scary and taboo don’t they? I used to be scared of them and then six years ago I started using one. Turns out it is WONDERFUL! It doesn’t take a trained financial expert to figure it out, it just takes answers and hopefully I can answer a few of those for you.
Q: Are credit unions covered under the FDIC?
A: No. They are however, covered by the NCUA (National Credit Union Association). Your money is insured up to $250,000 just like with the FDIC.
Q: Aren’t credit unions only for people who work in a union?
A: No. There are many, many credit unions that are open to the public. (I recommend Bellco Credit Union for those of you in Denver.) There are usually location requirements of joining a credit union.
Q: How is a credit union different than a bank?
A: Banks are for profit businesses, and *they* benefit from taking advantage of their own system and their customers. Credit unions are not for profit and members are actually owners. This means that all profits at a bank go into the pockets of the executives and shareholders. All earnings (or would-be profits at a bank) at a credit union go back to every member!! Better interest rates for savings and lower interest rates for loans. See the difference?
Q: Is there a membership fee?
A: Some credit unions might call it a membership fee. My credit union requires a one-time $30; $5 is a membership fee and is non-refundable. $25 is a minimum deposit which is kept in a separate membership account so that you always have a minimum of $25 in an account. These funds are refundable when you close your account, but you cannot access the account regularly.
Q: Are credit unions regulated by the government?
A: Yes!
Q: Do credit unions offer the same services as banks?
A: Yes. The important difference here is that while credit unions and banks both offer many of the same services you will find much better rates at a credit union almost 100% of the time. Better loan rates. Better savings rates. Better cd rates. Better everything.
Q: Do credit unions charge fees for anything?
A: I don’t *think* so. The only “fee” I am aware of is the membership charge when you first join as mentioned above. My credit union has no minimum charge, free unlimited debit card usage, free unlimited check writing, free online bill pay… In fact they have no convenience charges whatsoever!
Q: Are their any downfalls to using a credit union?
A: Their locations are limited. In my opinion, this isn’t really a big deal because they have mobile access and also they have free access ATM’s all over. I don’t really call that a downfall, but it has the potential to be an inconvenience.
For me, moving my money to a credit union was one of the best financial decisions I made in a long time!