what is a credit union 
a credit union is a type of financial cooperative that provides traditional banking services ranging in size from small volunteer only operations to large entities with thousands of participants spanning the country credit unions can be formed by large corporations organizations and other entities for their employees and members credit unions are created owned and operated by their members as such they are not for profit enterprises that are accorded tax exempt status understanding a credit unioncredit unions follow a basic business model members pool their money technically they are buying shares in the cooperative to provide loans demand deposit accounts and other financial products and services to each other any income generated is used to fund projects and services that will benefit the community and the interests of members originally membership in a credit union was limited to people who shared a common bond they may have worked in the same industry or for the same company or they may have lived in the same community however credit unions have loosened the restrictions on membership and often allow the general public to join to do any business with a credit union you must join it by opening an account there often for a nominal amount as soon as you do you become a member and partial owner that means you participate in the union s affairs you may vote to determine the board of directors and decisions concerning the union a member s voting right is not based on how much money is in their account each member gets an equal vote according to the national credit union administration ncua membership in federally insured credit unions grew to 136 6 million as of march 31 2023 1total assets in federally insured credit unions as of march 31 2023 were 2 21 trillion 1advantages of credit unions vs banksas with banks the process of making money at credit unions starts by attracting deposits in this credit unions have two distinct advantages over banks both resulting from their status as nonprofit organizations the profits that credit unions do make are used to pay members higher interest rates on deposits and to charge lower fees for services such as checking accounts and atm withdrawals in short a credit union can save members money on loans deposit accounts and savings products according to ncua data as of march 31 2023 the national average rate for five year certificates of deposit cds offered by credit unions was 2 66 compared to an average rate of 1 83 offered by banks 2money market rates at credit unions were also higher with an average rate of 0 53 versus the average bank rate of 0 43 2while these differences sound small they do add up giving credit unions a significant advantage over banks when competing for deposits credit unions provide better rates on most mortgages including 15 year and 30 year fixed mortgages which could be a good option if you are looking to purchase a home 2 disadvantages of credit unions vs bankscredit unions have considerably fewer brick and mortar locations than most banks which can be a drawback for clients who like in person service most offer modern services such as online banking and auto bill pay still the small size of many credit unions can mean a compromise on accessibility smaller credit unions typically do not have the same technology budget as banks so their websites and security features are often considerably less advanced that said some mid sized and larger credit unions may offer mobile banking apps that rival those of much bigger for profit institutions while credit unions offer most of the financial products and services that banks do they often provide less choice bank of america has 20 different credit card options ranging from rewards cards to student cards while the navy federal credit union nfcu has only six 34 the second largest credit union in the country the state employees credit union secu offers one credit card 56with more resources to allocate to customer service and personnel banks are keeping later and longer hours you may find them open until 5 p m or 6 p m on weekdays and often on saturdays as well credit unions tend to maintain traditional bankers business hours 9 a m to 3 p m monday through friday though the larger ones such as secu have a 24 hour customer service hotline insurance on credit union accountsthe federal deposit insurance corporation fdic does not cover credit unions however the ncua established in 1934 and which regulates federally chartered credit unions and most state chartered credit unions does provide account protection 7in fact one of the ncua s main responsibilities is to administer the national credit union share insurance fund ncusif which uses federal monies to back up shares deposits in all federal credit unions the ncua provides coverage for each individual account joint account trust account retirement account such as traditional iras roth iras or keogh plan accounts and business account for up to 250 000 per account 7for example if you have an individual account a roth ira and a business account at a credit union your total shares are insured up to 750 000 you can research credit unions of interest that the ncua regulates at the ncua website 