The Best Financial Credit Union – Everything You Need to Know

Meta: Credit unions and banks seem similar, but things are not so simple. This guide will discuss the best financial credit union, its pros and cons, and more. 

Intro

At first glance, credit unions (CUs) seem nothing special; they are just like regular banks with similar financial products. However, in-depth analyses reveal major differences and benefits between these two financial institutions. With proper inspection and research, the best financial credit union might offer much better saving plans than a bank.

This article will dive further into their core concepts, the fundamental distinctions between banks and unions, as well as some high-quality credit unions for you to consider.

What Exactly Is Credit Union?

What is it? – Source: Pix4free.

Credit unions are a type of nonprofit institution owned by people who utilize their financial products. Their users can get access to similar services and products offered by traditional banks, such as loans, savings and checking accounts, and credit cards. Director boards are elected to keep a close eye on the credit unions, ensuring they represent their greatest interests.

Still, to secure their places on the market, these nonprofit institutions strive to offer competitive products at better fees and rates than for-profit banks. Though both services charge account fees and interests, credit unions reinvest these profits into their offered products – while banks deliver them directly to shareholders.

On another note, as credit unions are owned by their members, opening an account here requires you to meet certain criteria. The same also applies to credit card applications and loans. Such requirements vary across unions, an aspect we will return to later in this article.

What Is The History of Credit Unions?

Their history – Source: Wikipedia.

“Spolok Gazdovsky”, founded around 1846 by Samuel Jurkovic, is reported to be the very first European credit union, providing cheap loans from funds assembled by standard savings for the cooperative’s members. In exchange, these members must commit to moral lives and plant at least two trees in public places every year. 

Despite its rather short existence, Spolok Gazdovsky serves as the basis of Slovakia’s cooperative movements.

A few years later, in 1852, Franz Delitzsch operated two different pilot projects (with one in Delitzsch and the other in Eilenburg), before merging them into a successful urban union system. Inspired by this triumph, Friedrich Raiffeisen founded another non-profit institution in Heddesdorf, Germany, in 1864. Upon his 1888 death, these unions had already expanded to Austria, England, Netherlands, France, Italy, and other countries.

Compared to other nations, America is among the latest newcomers in the game. Caisse Populaire Levis, North America’s very first credit union brand, launched on January 23, 1901 with a deposit of merely 10 cents.

Its founder, Alphonse Desjardins, was determined to step up the game once he learned about a group of Montrealers that had to pay around $5000 of interest from a mere $150 loan. Drawing strategies from European precedents, he established an innovative parish-based structure for Quebec, which later prompted the Manchester government to build St.Mary Credit Union. 

From this moment, these institutions started to snatch a firm spot in Manchester’s mainstream workflow, before spreading their scope to the rest of the U.S states.

The Global Presence of Credit Unions

As per WOCCU (Worldwide Councils of Credit Union), 85400 CUs were established in 2018 across 118 countries, serving around 274 million members and overseeing 2.19 million dollars in assets. 

Still, remember that these data do not include cooperative banks. As a result, certain countries often perceived as credit unionism pioneers – like the Netherlands, Italy, France, and Germany – are overlooked in the final rankings. EACB (European Associations of Cooperative Banks) recounted 42 million members for these countries in 2019.

Nations with the highest CU activities are pretty diverse. WOCCU confirmed some of the leading countries in this field, listed as follows (units are measured in million):

  • 1. The U.S – 101
  • 2. India – 20
  • 3. Canada – 10
  • 4. Brazil – 6
  • 5. South Korea – 5.7
  • 6. Philippines – 5.4
  • 7. Mexico and Kenya – 5.1 each
  • 8. Ecuador – 4.8
  • 9. Australia – 4.5
  • 10. Thailand – 4.1
  • 11. Colombia – 3.6
  • 12. Ireland – 3.3.

Meanwhile, countries with the most dominant percentages of CU members in economically active populations are: 

  • 1. Barbados – 82%
  • 2. Ireland – 75%
  • 3. Grenada – 72%
  • 4. Tobago and Trinidad – 68% each
  • 5. St. Lucia and Belize – 67% each
  • 6. Nevis and St. Kitts – 58% each
  • 7. Jamaica – 53%
  • 8. Barbuda and Antigua – 49% each
  • 9. The U.S. – 48%
  • 10. Ecuador – 47%
  • 11. Canada – 43%

What Is The Best Financial Credit Union of 2022?

What are some options to consider? – Source: Flickr.

Alliant

Seizing our title of “the best credit union” is none other than Alliant, whose high-rate checkings earn a 0.25% yield per year. (given that you receive frequent e-statements and own at least one monthly electronic deposit). 

Also, the union generates 1.4% APY from balances of no less than $100. The great news is that no fees or minimum balances are required, saving quite a huge sum for its annual members. Even better, each customer gains access to more than 80,000 ATMs (all fee-free, of course) across the states. 

Anyone living/working near its headquarters – or supporting its sub-branch organization “Foster Cares to Success” – is eligible to open Alliant accounts. Note that Alliant will make $5 donations to the organization on your behalf should you fall into the latter group.

Consumers

This union is also a fairly household name in the United States. Consumers’ checking accounts earn about 4.1% APY on balances of no less than $10,000, provided that all requirements are satisfied. One of such criteria is to spend at least $1000 a month on affiliated credit cards. 

But no worry; even when you do not fulfill all the conditions, high-rate earning is still not out of reach. Not to mention, Consumers offer lots of other checking alternatives (with no interest payment) that require only the bare minimum for account opening. Basic savings accounts are even free of charge, though obviously, they will yield less interest.

The union is Illinois-based, while other branches spawn mostly in Chicago. Still, by joining Consumers-affiliated nonprofits for $5, anyone in the country can be a member. Once you have officially been a part of the Consumers Union, wide-open access to Co-op shared ATMs and branches will be possible!

Connexus

Similar to the other previous alternatives, its earnings surge up to 1.75% APY with balances of $25,000 or less with certain conditions required, including e-statements subscriptions, purchases of 15 debit cards, and $400 spent per month. Non-network ATM charges are also reimbursed to $25; but in return, no monthly fees are expected from the members!

Connexus members can choose to bank at dozens of public branches, 50% located in Wisconsin with millions of shared sub-branches and more than 54,000 ATMs at zero cost. 

Furthermore, if you are an active participant of Connexus Associations (an organization that offers financial education and college scholarships), then your applications for account opening will get accepted immediately. No other eligibility conditions need to be fulfilled! 

Advantages of Credit Unions

Some advantages of CUs – Source: Flickr.

1. Lower Fees

Most CUs offer much lower fees than typical banks, all thanks to their nonprofit financial system and tax-exempt status. Instead of paying shareholders, CUs can reinvest earnings back to their own members, which decreases charging needs and overdraft penalties. 

2. Greater Savings

As per NCUA’s 2021 report for CU and bank rates, CUs offer much greater interest percentages than most banks on CDs and saving accounts. Within 2021’s first quarter alone, national rates for 5-year CDs are about 0.76 for CUs, while banks only have a humble rate of 0.63.

Aside from high interest percentages, these unions are pretty well-received for low loan rates compared to banks – despite their similar products. Again, this feat is achieved thanks to these CUs’ non-for-profit business models.

3. Support from Local Experts

According to the FCUA 1934 enactment, CUs offer their memberships to specific populations based on either locations or occupations. For instance, Cal Coast Credit Unions are open to anyone living or working in Riverside and San Diego counties.

As a result, these institutions deliver in-depth financial counseling from local experts, which assists their members better with more complicated issues. Such extensive support is not available in regular commercial banks.

4. Dedicated Commitment to Their Members and Local Communities

As clearly suggested by their philanthropic goals, CUs depend on memberships for continuous operation rather than profits. All members are subjected to strong customer service and profitable long-term offerings.

These organizations also cater to the local community’s overall improvement via college scholarships, tree plantation, and more.

Disadvantages of Credit Unions

Though the pros are abundant, there are still several cons to keep in mind:

  • Required Membership: Unless you are a member, joining CUs is impossible. Account creations also force you to abide by lots of eligibility requirements. For certain institutions, fees are also a must.
  • Fewer Products: The number of financial product options cannot fare against banks’.
  • Limited Branch Sites: Since CUs are tailored for particular populations and communications, it’s quite a challenge to spot their physical locations. Such restricted accessibility can pose many troubles for traveling members or those who do not live around the neighborhood.

How Can You Join A Credit Union?

How to join? – Source: Wikipedia.

Becoming a CU member involves different criteria across each institution. Here are some of the most common qualifying requirements:

  • You work with eligible employers or live in specific regions.
  • You can access affiliations with particular groups (ex: schools or labor unions)
  • One family member of yours has already been accepted as a member of one CU.

And what if none of these eligibility requirements are met? Don’t worry; some of the doors are still open for you! 

Several CUs will accept your applications if you agree to join their sub-branch organizations (sometimes, fees are expected, but there are also institutions willing to pay them on your behalf). Alliant is a case in point, which you can register by purchasing a membership of its charity organization “Foster Cares to Success” at $5.

Aside from eligibility criteria, one-time enrollment fees are also a must in certain cases (often up to $25), along with deposits for account opening (below $10)

Among thousands of considerations, we suggest you prioritize local CUs over those outside your neighborhood communities. With local unions, you will be more likely to meet all the membership requirements. Only turn to non-local CUs on the off-chance that local ones do not have any financial products you are looking for.

How Does A Union Differ From A Bank?

How do they differ from banks? – Source: Wikipedia.

Status

The biggest difference between the two lies in their status. While credit unions are member-only, nonprofit financial institutions, their bank counterparts serve as for-profit institutions accessible to everyone.

Furthermore, CUs are often established to operate in specific businesses, communities, or regions, providing greater in-person customer support at physical branch sites than through online platforms.

Product Options

Keep in mind that the number of CU offerings might lag a bit behind banks’. For instance, a typical CU can only deliver no more than two options for credit cards, while most banks present dozens of choices applied to all walks of life. 

But fortunately, fewer products do not necessarily mean less competitiveness. As previously mentioned, CUs reinvest their profits into their own products, upgrading terms and services on a regular basis. Not many banks do the same; instead, their profits will go straight to shareholders.

Insurance for Deposited Money

In terms of stakes for savings and checking accounts, it’s crucial to ensure your deposited money is insured. Both banks and CUs offer insurance of $250,000; still, CUs receive backing from National Credit-Unions Administrations (NCUA), while most banks get support from Federal Deposits Insurance Corporations (or FDIC).

NCUA never covers financial losses on bonds, stocks, mutual funds, life insurances, and affiliated annuities. On the other hand, FDIC does not provide assistance for securities and investment products with no deposit. Assess your preferences to decide on the most suitable choice.

Conclusion 

This article has discussed the best financial credit union for your consideration while diving into some of their notable upsides and drawbacks. Both banks and CUs have distinctive strengths, so remember to review your saving plans to decide on a more profitable and practical alternative!

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