What are the advantages of credit unions?

Where you bank matters. You invest time and hard work into every dollar you earn. You don’t want to waste your money on bank fees or high loan rates, you want to protect and grow it.

Credit unions understand this better than other financial institutions. The main advantages of credit unions include lower account fees, higher interest rates on savings, and member ownership rather than stockholder control.

Take a closer look at each benefit and how it can improve your banking experience and financial well-being.

What you’ll learn:

• Credit unions don’t have customers, they have members
• Banking with credit unions typically means lower fees
• Credit unions have competitive rates
• Credit unions leverage a large ATM network
• Credit unions are active in their communities
• Credit unions don’t have customers, they have members

The most obvious difference between a bank and a credit union is credit unions answer to their members, not stockholders. Your membership represents a share of ownership.

Anyone who has an account at a credit union, whether it’s a car loan or checking, must be a member. Usually, membership is represented by a “share” in a savings account. For example, every member at Alliant has $5 in a savings account that represents their membership.

Credit unions take pride in serving their members’ best interests. Because their members come first, credit unions focus on empowering members through digital and customer service, as well as financial education. When they’re efficient with their operating dollars, credit unions also can pass their savings onto their members through lower fees and higher rates.

Banking with credit unions typically means lower fees

Banking and investment fees are irritating, especially when you don’t expect them. Since banks are in the business of making money from their customers, you may find fees on your account for things like a low balance in your checking account. Instead of surprise fees and hidden charges that can happen at banks, credit unions, in general, significantly limit their fees.

Credit unions have competitive rates

Everyone wants to spend less money and have their money earn more money. Credit unions help you achieve this because of their great rates. Every dollar you invest in a credit union is reinvested in you. Therefore, credit unions have higher deposit rates and lower loan rates.

You’ll notice credit union savings and checking accounts are usually high-rate accounts that earn you an interest rate higher than the bank industry average. Credit union certificates, which act similarly to certificates of deposits (CDs) at banks, will also have great rates.

Credit unions also provide many of the same types of loans as a bank, with usually lower rates.

Credit unions leverage a large ATM network

Thanks to digital access, banking is no longer restricted to a building. It is with you everywhere you go, through online banking on your computer or a mobile app on your phone.

Even with digital access, credit unions recognize you may need cash from an ATM sometimes, so they  have partnered with other credit unions to create a network of ATMs. Alliant offers its members access to 80,000 fee free ATMs across the country.

(Alliant also offers ATM fee rebates to members when they use a non-network ATM, up to $20 per month for members with a checking account.)⁵⁹

Credit unions are active in their communities

As a non-profit, credit unions are member- and community-oriented. For example, the  Alliant Credit Union Foundation is the not-for-profit charitable arm of Alliant Credit Union. It focuses on providing digital access and financial literacy for underserved communities. The Foundation also invests in local community organizations and provides grants to a variety of charities.

Credit union myths

Membership qualifications: To be part of a credit union, you need to be eligible for membership. This often is through an employer, another organization or a family member that already belongs to the credit union. At Alliant, every adult in the U.S. is eligible to apply to join Alliant Credit Union. Applying to become a member is easy, plus Alliant makes a one-time $5 donation to the Alliant Credit Union Foundation on your behalf that counts as a one-time membership fee.

Insured deposits: Banks and credit unions accounts are insured for the same amount of money, up to $250,000. The difference is the branch of the government that insures your deposits. Credit unions are insured by the National Credit Union Administration (NCUA).

Loans and deposit accounts: A common misconception is that credit unions do not offer as many competitive products as banks. It simply isn’t true. Credit unions can help you with your next mortgage, car loan, credit card, certificate of deposit, and more financial services. Interest rates are typically much better than big banks, making a credit union account a financial win for you.

Non-profit vs. not-for-profit: Even some experts get this wrong. Credit unions are not-for-profits, not non-profits. Credit unions make profits but they reinvest those profits, both to benefit members and improve the products and services they provide to members.