Competitive interest rates, minimal fees and more perks of banking at a nonprofit institution.
Credit unions are nonprofit institutions known for offering higher interest rates on their products than other for-profit banks. Historically, credit unions were set up to help workers access banking services and products without high rates and fees typically associated with traditional banks.
Unlike banks, customers at credit unions are considered members who are also part-owners of the credit union. As such, members can take part in decision-making processes like voting for the board of directors. Much like FDIC deposit insurance at banks, deposits at credit unions are insured up to $250,000 by the National Credit Union Administration. Additionally, federally chartered credit unions are regulated by the National Credit Union Administration, whereas state-chartered credit unions are regulated at the state level.
What is a credit union and how does it work?
Originally, credit unions were created by various industries to give their workers access to banking products without having to pay high rates and fees. For this reason, many credit unions today still only cater to certain groups, such as industrial unions and building societies. However, some have been able to expand their membership to the general public.
The savings accounts offered by credit unions work the same way as they would at a bank. There are usually a number of options available, including high-interest savings accounts and CDs. With some credit unions, you might be able to find introductory offers or extra features. When shopping around for financial products, compare your options to find the one that best meets your individual needs.
Credit union savings accounts
| Name | APY | Minimum deposit | Account highlights |
|---|---|---|---|
| Alliant Credit Union High Rate Savings Account | 1.8% | $5 — paid by Alliant | NCUA insurance and no monthly maintenance fee if you sign up for eStatements |
| American Airlines Credit Union Primary Savings Account | 1.71% | $5 | NCUA insurance |
| Wings Financial Credit Union High Yield Savings Account | Up to 1.26% | $0 | NCUA insurance |
| Connexus Credit Union Savings Account | 0.25% | $5 | NCUA insurance, unlimited ATM withdrawals and access to over 50,000 fee-free ATMs |
| Bethpage Credit Union Savings Account | 0.2% | $5 | NCUA insurance, ATM card and low $5 minimum balance requirement |
| Golden 1 Credit Union Regular Savings Account | 0.15% | $1 | No monthly maintenance or minimum balance fees |
Compare with bank savings accounts
What are the benefits of joining a credit union?
- Multiple options. Most credit unions are able to offer their members a range of savings accounts to suit various needs.
- Lower fees. Since credit unions are nonprofit institutions, fees for services and accounts are often lower than banks.
- Competitive rates. Many credit unions offer interest rates that compare to rates found at banks and other institutions.
- Personalized experience. Credit unions are much smaller than most banks, allowing them to offer a more personal approach to banking.
What are the risks of joining a credit union?
While credit unions may not have the financial strength of larger banks, many are still regulated and insured so that your money is safe. Still, there are a few things to watch out for.
- Limited presence. Due to its smaller size, you might find that the credit union you choose doesn’t have a large presence in the US.
- Membership fees. Most credit unions require you to pay a membership fee or make a donation in order to join.
- Less tech-savvy. Smaller credit unions may not have the resources to invest in expensive technology like mobile banking apps. Though most do offer online banking.
Advantages and disadvantages of savings accounts
What are the advantages of a credit union over a bank?
Since credit unions are owned by customers, you might find that the rates and fees are lower than what a bank offers. Minimum deposit requirements are often lower, making it easier to qualify for savings plans and CDs.
How to compare credit union savings accounts
Before you can compare savings accounts offered by credit unions, you’ll need to make sure you’re eligible to become a member. Some credit unions have membership requirements based on your location or occupation, while others may allow anyone to become a member. Once you narrow down your choices, you can begin to compare features of each savings account.
Eligibility
Make sure you’re eligible to open an account at the credit union you’re considering. Eligibility requirements vary by institution, so shop around to find one that’s right for you.
Membership fee
Credit unions will often require a fee to “buy” your membership. This is typically no more than $1 or $2 and will be deducted from your initial bank account. Others might ask you to make a donation to a partner organization in order to become a member.
Interest rates
Once you’ve narrowed down your options, check the interest rates for the savings accounts you’re interested in and ensure they’re competitive with what you’d find at a traditional bank.
Fees
Check for any fees that might come with the account, including monthly maintenance, minimum balance, ATM or excessive withdrawal fees.
Accessibility
Some credit unions offer online banking or mobile apps to give you unlimited access to your account. You should also consider how many branches and ATMs you’ll have access to, and how far the nearest location is.
Option for a linked account
It’s common to link savings accounts to a standard checking account so that you can easily transfer funds from one to the other. If you don’t want to open a checking account at the same credit union, you’ll need to check if you’re allowed to link your savings account to an account at another institution.
Minimum balance requirements
To avoid minimum balance fees, look at accounts that have no requirements for how much money you keep in your savings account. If you decide on an account that has a minimum balance requirement, be sure to keep your balance above that level to avoid charges.
Questions to ask when choosing a credit union
If you’re thinking about joining a credit union, consider the following factors when making your decision:
- Does the credit union have a branch close to you?
- Does it offer the accounts, credit cards and services you require?
- Does it charge many fees on its products?
- How long has it been established? Does it have a good reputation?
- Does it offer online banking? If so, is it easy to use?
- Can it offer prompt and friendly customer support whenever you need help?
- Is it chartered at the state or federal level? If state, is it covered by the National Credit Union Administration?
The biggest credit unions in the US
Here are the top 10 largest credit unions in the US by assets:
- Navy Federal Credit Union — $89.8 billion
- State Employees’ Credit Union — $38.39 billion
- PenFed Credit Union— $23.36 billion
- BECU — $18.61 billion
- SchoolsFirst Federal Credit Union — $14.75 billion
- Golden 1 Credit Union — $11.87 billion
- First Technology Federal Credit Union — $11.78 billion
- Alliant Credit Union — $10.34 billion
- America First Credit Union — $10.05 billion
- Security Service Federal Credit Union — $9.51 billion
Bottom line
If you’re looking for a personalized, no-frills banking experience, a credit union may be just the ticket. Most offer products with competitive rates and minimal fees, allowing you to grow your savings and reach your financial goals faster. Eligibility requirements are stricter than with traditional banks, however, and branch availability is often limited.
Before making a final decision, compare your options with our guide to savings accounts.
