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Best Credit Unions

If you’re not exactly sure what a credit union is, it’s completely understandable. Commonly mistaken for an expensive members-only clique or a seedy payday loan franchise, credit unions may be completely mischaracterized by a lot of people who don’t understand exactly what they are.

What's a credit union?

Put simply, a credit union is a type of financial cooperative. It’s a members-pool-their-money approach to funding loans and providing other products and services. Any generated income is used to benefit the credit union’s members.

Furthermore, they deliver a wide range of products and options, from checking and savings accounts to credit cards, auto loans, and mortgages.

A credit union over a bank?

Millions of people have chosen credit unions over banks, and for good reason. A bank’s overall purpose is to generate profits for shareholders, while credit unions operate as not-for-profit organizations for their members, not stakeholders. Often, credit unions can offer lower fees and account minimums, higher savings rates and lower interest rates for members.

Advantages of credit unions

While we’ve already mentioned some major advantages to using a credit union, here are a few more:

  • Customers are owners.
  • Lower interest rates for credit cards, home equity loans, mortgages, auto loans and personal loans.
  • Overhead costs are usually kept low due to the nature of credit unions.
  • Most offer credit cards just like a regular bank.
  • Fees, such as transfer fees, overdraft fees, and ATM fees are lower or even free.
  • Credit unions may be willing to work with you if you have poor credit.

Disadvantages of credit unions

Though there are ample advantages with credit unions, the disadvantages must be considered:

  • Fees, penalties, etc. can vary widely, so read up on what a particular credit union offers.
  • Technology isn’t as readily available.
  • Not as many brick-and-mortar locations available.
  • Limited offerings, as in one type of checking account or savings account.
  • Sometimes credit union membership isn’t available to just anyone.
  • Savings, checking, money market funds and CDs may have higher interest rates.
  • Rules exist regarding who can join a credit union (geographical region, specific employers, alma maters, etc. matter when it comes to credit unions).

What about insurance?

Credit unions are not FDIC-insured, but if you join a credit union, check to be sure your funds are guaranteed by the National Credit Union Association (NCUA). The National Credit Union Association acts just like the FDIC does for many U.S. banks. You’ll have exactly the same amount of funds guaranteed as you would if you’d opened an account at a bank: up to $250,000.

Best for checking and savings accounts

Alliant Credit Union offers a buffet of low fees, high-yield High Rate checking (0.65% APY) and savings (1.45% APY) accounts and scores of ATM access across the country. In addition, its mortgage rates remain competitive and its auto loans are currently as low as 2.74% APR with a max term of 60 months.

Its High-Rate checking account doesn’t charge monthly maintenance or out-of-network ATM fees, and reimburses ATM surcharges up to $20.

In addition, online banking with Alliant Credit Union offers all the frills: online account management, money transfers, online bill pay, free credit score access, eStatements and expert budgeting and planning tools.

To join Alliant Credit Union: simply make a one-time $10 donation to the charity Foster Care to Success.

Best for high APY

Consumers Credit Union offers a 3.09% APY on checking account balances up to $10,000. There are requirements to maintain that stellar APY, however:

  • You must make 12 debit/check card purchases every month
  • You’re required to make one direct deposit, ACH debit OR online bill payment every month
  • You’ll need to access online banking at least once a month
  • You’re required to enroll in eDocuments (paperless statements)  

In addition, cardholders can earn even higher rates with balances up to $15,000 (3.59% APY) and up to $20,000 (4.59% APY) by spending $500 or more in CCU Visa credit card purchase transactions and by spending $1,000 or more in CCU Visa credit card purchases, respectively.

Consumers Credit Union also offers certain advantages and conveniences, including:

  • Over 30,000 ATMs and 1,800 shared branches
  • Total reimbursement for ATM fees
  • Online banking and bill pay
  • Mobile banking
  • No minimum balance requirements
  • No monthly maintenance fees
  • Visa debit card with chip technology
  • Unlimited check writing option

Best for in-branch service

First Tech Credit Union offers 40 branches in eight states and Puerto Rico, including California, Colorado, Georgia, Idaho, Massachusetts, Oregon, Texas, and Washington.

Well-known for its large network of partners that offer in-branch service and ATM access for free, First Tech Credit Union also offers the following:

  • As low as 3.59% APR on vehicle loans
  • As low as 4.49% APR on home equity loans
  • As low as 10.24% APR on credit cards
  • Earn up to 1.58% on Dividend Rewards Checking

To join, simply donate $8 to the Financial Fitness Association, or a $15 gift to the Computer History Museum.

Best for auto loans

Navy Federal Credit Union is obviously open to those who served in the military, and is open to Army, Marine Corps, Navy, Air Force and Coast Guard veterans. Since 1933, it has served over seven million members.

In particular, auto loans have a low APR, as low as 2.29% for 36 months, depending on the loan type and type of vehicle.

In addition, Navy Federal Credit Union can also offer the following:

  • As low as 4.213% APR on ARM mortgages
  • As high as 3% APY on certificates
  • As high as 0.45% APY on checking
  • As low as 7.24% APR on credit cards

Navy Federal Credit Union doesn’t charge monthly fees on several checking accounts, and some offer ATM fee rebates.

Other options

Don’t forget to look into your local community credit union. While it’s great to check out some of these nationwide options, sometimes nothing else can beat what’s in your own backyard. In addition, don’t forget to check out the following:

  • Your church or denomination may offer a credit union
  • Military credit unions are excellent, and sometimes right on base.
  • Universities offer credit unions for their alumni

Final thoughts

According to mycreditunion.gov, other benefits to joining a credit union include:

  • financial education and outreach to consumers;
  • in-school credit union branches and
  • help with small business needs.

Since the recession, some individuals have taken the community-oriented approach and stored their cash with credit unions instead of huge national banks. The all-in approach to helping others, keeping it local, and taking advantage of lower fees and interest rates has appealed to millions of credit union members since the recession.