Questions to Ask Before Joining a Credit Union

People who lack experience with credit unions might think they function the same way as banks. While credit unions offer many of the same services as banks, they work differently.

For instance, credit unions exist to serve their members, who are also the credit union’s customers. In contrast, banks provide services for customers to earn money for their investors. The difference between these two business models can make a big difference for both savers and borrowers.

Also, while you might find similarities and differences between credit unions and banks, even individual credit unions can vary considerably. From who can qualify for membership to how your money is protected, these are all questions to ask before joining a credit union.

To better understand the nonprofit financial institution, continue reading for important questions to ask before joining a credit union.

Who can join a credit union?

Each credit union establishes a field of membership as part of its charter, and this document specifies who can become a member. Credit unions might sometimes expand the field of membership after gaining approval from the National Credit Union Administration or other regulatory bodies.

Some examples of membership eligibility include geographic areas, employers, or industries. Credit unions often offer membership to spouses or other family members of eligible members.

For example, Radiant Credit Union’s field of membership includes spouses of qualified, deceased people and all immediate family members of current members.

In contrast, some credit unions open their membership nationwide and allow online enrollment from anywhere. Many of these institutions will have requirements to join, such as a minimum deposit in an account, membership dues, or initial application fees.

How do credit unions work as nonprofit organizations?

Credit unions exist to serve their members, so they may offer better terms and rates on loans and checking or savings accounts than banks. As a nonprofit organization, a credit union will invest profits back into the organization instead of distributing them to investors.

Radiant Credit Union here in Florida supports several charitable organizations, including Rays of Hope. This nonprofit organization backs education, development, and the overall well-being of the young people in the communities the credit union serves.

What is the NCUA?

The first credit unions in the United States opened their doors early in the 1900s. The U.S. Congress established the National Credit Union Association in the 1970s. This independent federal organization acts to protect members, and it oversees and regulates credit unions and their charters.

The NCUA performs many of the same functions for credit unions that the FDIC does for banks. For instance, the NCUA also insures deposits for checking, savings, money market accounts, and CDs.

Note that only federally chartered credit unions must belong to the NCUA, but state-chartered institutions may opt to join. Sometimes, state-chartered credit unions buy private insurance to protect deposits. In any case, prospective members should find out how the organization protects deposits.

How does a share account work?

Credit unions refer to their savings and checking accounts as share accounts. In this case, the term share refers to a member’s share of ownership in the institution.

For example:

• A share savings account will pay dividends, comparable to the interest paid by bank savings accounts.
• A share checking account, sometimes called a draft account, keeps money liquid for frequent withdrawals by debit cards, online transfers, or checks.

Do credit unions keep up with technology?

Modern banks offer their customers plenty of digital services, like access to ATMs, alerts, mobile apps, and online banking. Many credit unions provide these same services, but offerings may vary. Ask about the institution’s online and mobile services, email and text alert options, ATM fees, and other preferred services.

Radiant Credit Union offers various digital services, including 24-7 online access, mobile apps with mobile deposits, free check and statement images, and more.

How do credit unions differ from banks?

Banks and credit unions offer many of the same services and often look similar. Still, credit unions and banks differ in several ways:

• Banks operate as for-profit companies, but credit unions work as nonprofit organizations.
• Credit unions serve members, but banks serve customers and investors.
• The FDIC regulates banks and protects bank deposits, and the NCUA oversees and insures credit union deposits.
• Credit unions may offer fewer financial products, digital services, and branch locations than large banks.
• Credit unions may deliver more educational resources and personalized support than banks.

Credit Union Membership Offers Accessibility, Flexibility, and Savings

Credit unions return profits to members in the form of better rates, terms, and personalized services. These institutions can also enhance the financial standing of their members’ communities, organizations, or professions.

Many credit union members like the idea that their choice to bank with a nonprofit provides greater access to competitive rates on financial services like mortgages, car loans, and other products. This advantage can help you save money now and in the future.

If you live in North Central Florida, you should check and see if you're eligible to join us here at Radiant Credit Union – we'd love to serve you!