Are you ready to take control of your finances and open a credit union account? Opening a credit union account can be a game-changer for your financial future, but it’s important to have all the necessary information on hand before diving in. From what documents to bring to how to choose the right credit union for you, we’ll walk you through everything you need to know about the process so you can start enjoying the benefits of being a credit union member with confidence!
KEY TAKEWAYS
- A credit union is a not-for-profit financial institution that is member-owned and operated. This model provides members with low interest rates on loan products, lower fees, and higher interest rates for investment and savings accounts.
- When considering opening an account at a credit union, you should consider eligibility requirements, minimum balance requirements, interest rates, fees, loan options, accessibility, and convenience.
- Understand the process of opening an account such as credit checks and necessary documentation.
What is a Credit Union?
Credit unions are not-for-profit financial institutions. They operate as a cooperative, member-owned financial institution. This means credit unions are owned and operated by its members. Credit unions are democratically governed, giving each member one vote in banking decisions such as electing the board of directors. The board of directors are volunteers and not compensated for their role. Credit unions are federally insured by the National Credit Union Association (NCUA).
Benefits of Choosing a Credit Union over a Traditional Bank
The not-for-profit status of credit unions translates to a member-centric redistribution of end-of-year profits. Under this model, profits are reinvested back into the credit union and community in which they serve, in the form of:
- Low interest rates on loan products
- Lower fees
- Higher interest rates for investment and savings accounts
Credit unions are known for their personalized banking experience and community investment. You may have heard the credit union motto, “People Before Profits” or “People Helping People,” because they work together to provide members with competitively priced loan products and significant cost savings.
CO-OP Shared Branch
The credit union’s cooperative structure means they support each other’s members for most transactional needs. Joining a credit union gives you access to a network of credit unions called CO-OP Shared Branch. Credit union members now have access to nearly 30,000 surcharge-free ATM locations and more than 5,900 convenient branch and self-service locations covering all 50 states. Accessing your money has never been easier and hassle-free.
- Find a location by telephone: Call 1-888-SITE-CO-OP (888.748.3266)
- Find a location near you by text (Data carrier rates may apply): Text a ZIP Code to 91989. You will receive a text with the address of the closest CO-OP ATM and the closest Shared Branch location.
- Find a location by downloading the CO-OP Solutions Mobile APP
Look for these logos to identify participating ATM or Network Branches.
What Should You Consider Before Opening an Account at a Credit Union?
Eligibility Requirements for Membership
As defined by the National Credit Union Administration (NCUA), credit unions must establish a field of membership (FOM). The field of membership is a common bond amongst its members, like where they live, work or worship. It is a part of the credit union’s official charter and is the legal definition of who is eligible to join the credit union. Others within close relationship with a credit union member may also be eligible to join.
There are three types of FOM eligibility:
- Occupational (members work for the same employer or in the same line of work)
- Associational (members belong to a particular church; professional, civic, or fraternal group, or labor union)
- Community (members live, work, worship, or attend school in the same geographic area).
Use this credit union locator to find the nearest branch to you. Eligibility requirements vary depending on the institution. Information on eligibility is best found on the credit union’s website.
Minimum Balance Requirements
When you open an account at a credit union, you own a share in the credit union. Credit unions typically require a $5 to $25 deposit into the savings account to establish membership. To maintain your ownership stake and be in good account standing, these funds are not made available to you unless you choose to close your account. Some credit unions may also charge a nominal fee to process the account opening.
Many credit unions offer special deposit accounts like a Money Market that offer higher interest rates which require a minimum balance to maintain the account benefits. Credit unions may also offer accounts without minimum balance requirements.
Interest Rates and Fees
Bank customers scarcely experience rewards of belonging to a for-profit institution. Credit unions use account deposits and other earnings to provide members with competitive interest rates and significant cost savings over the lifetime of their loan. Compared to traditional banks, credit unions offer better savings rates and lower borrowing costs across the board. On average, credit union members earn more on their deposits and pay lower borrowing costs in nearly all twenty-three loan and product categories. Look at the NCUA’s quarterly report on product comparisons offered by credit unions compared to for-profit banks.
Along with better interest rates on savings and loan products, credit union members can look forward to lower or lower fees. Since credit unions do not have shareholders to satisfy, they tend to have no fees or lower fees. This means that you can save money on things like overdraft fees, ATM fees, insufficient funds, and monthly maintenance/service fees.
Loan options
Credit unions offer most of the same loan options you would find at a bank, including mortgages, home equity loans, home equity lines of credit (HELOCs), personal loans, auto loans and more. Getting a loan from a credit union should be your first consideration when you’re in need of a loan. Most credit unions have more flexible lending requirements than traditional banks. While banks typically have strict credit requirements and automated decision making for loans, credit unions have local employees making decisions and can factor in things like length of employment, co-borrowers, and other personal factors impacting your credit. A credit union is often more willing to work with borrowers who have less-than-perfect credit.
Accessibility and Convenience
Credit unions are local financial institutions and are often smaller compared to banks. The size of a credit union in terms of the number of branch locations and members is a considerable factor.
With technology being an integral part of our daily lives, banking is no exception. Credit union members do not have to sacrifice accessibility or convenience. Most credit unions now offer online banking services as well as mobile apps, making it easy to check balances, transfer funds, pay bills, and more, on the go or from the comfort of your own home.
Online banking services offered include:
- Account balances at a glance
- Account alerts
- Access to prior statements
- Transaction search
- Automatic savings plan
- Money transfers
- E-bills and bill pay
For those who can’t reach their credit union within normal business hours, many have extended hours at select branches or have call center services with representatives during evenings and weekends. This allows members to speak with someone directly without having to take time off work or rearrange their schedule.
Necessary Information and Documentation
When opening an account at a financial institution, you will need to provide information to verify:
- Your legal name
- Date of birth
- Address
- Identification number: Can be a Social Security number, Individual Taxpayer Identification Number (ITIN), passport number and country of issuance, alien identification card number, or other government-issued identification number. This requirement may vary by financial institution.
Many financial institutions require you to show a U.S. or state government issued identification card with your photo on it, such as a:
- Driver’s license
- U.S. passport
- Military identification.
If you do not have a U.S. or state government issued form of identification, some financial institutions accept foreign passports and consular IDs.
Additionally, you generally need one of the following:
- Social Security card
- Acceptable proof of address:
- Lease agreement
- Utility Bill
- Bank Statement
- Birth certificate
Understanding the Process of Opening a Credit Union Account
Credit Checks
You do not need a credit score to open an account at a financial institution. However, the institution may make a soft inquiry on your credit when you open a new checking account to check for a history of fraud. These soft checks do not affect your credit score. But, an institution may perform a hard credit check when a member is applying for a loan product of some kind, which may affect your credit score.
Financial institutions will look at your ChexSystems report, a bank reporting agency that gathers information about your banking history. The report helps the institution determine whether you’re a reliable account holder. Red flags such as accounts being overdrawn or having insufficient funds, unpaid bank fees or involuntary account closure with a previous financial institution could be cause for a financial institution to refuse you an account.
Processing Time
The time it takes to open an account at a credit union can vary depending on several factors such as the type of account, number of joint owners/authorized users/beneficiaries, the financial institution, and the documents you have prepared. However, with proper knowledge and preparation, you can expedite the process and get your new account up and running in no time.
Opening an account is a quick and easy process with in-person and online options. Applying online may take a few hours but allow 1-2 business days for document verification and approval. Applying in-person with prepared documents can expedite the process. Some banks do instant approvals, meaning you can start using your account right after submitting your application. But others may need further verification for security reasons which could entail a slightly longer waiting time.
Receiving additional products such as a debit card and checkbook can take 7-15 business days after approval. However, some institutions offer instant issue cards and checks that you may receive right away.
Money Management with The District Credit Union
At The District Credit Union, you are not just another account number or customer; you are a member-owner. We prioritize your needs and satisfaction before profits.
- Learn why you should join The District.
- Contact us with questions about becoming a member or about your current accounts.
- We are here to help you make the best-informed decision. Schedule an appointment to speak with our Financial Service Representatives.
What’s stopping you from taking advantage of being a credit union member today?