Credit Union Pros and Cons

Have you considered maintaining an account at a credit union in addition to or instead of at your local bank? You should. Credit unions have advantages and disadvantages. Let's review some of them:


  • They're owned by their members and are nonprofit.

  • They offer competitive interest rates, usually beating the best rates from local banks.

  • Their service is often better, too. If you turn to a traditional bank for guidance, you might not be told everything you should know, as that's not always in the bank's best interest. But, credit unions have no reason not to help you as much as they can.

  • Credit unions offer more and more services these days. Many offer credit cards, debit cards, mortgages, new and used car loans, checking, and more.

  • At many credit unions, you need just $1 to open an account, qualifying you to take advantage of their many services.


  • Credit unions typically have few branch offices and few, if any, ATMs. To circumvent the ATM problem, many credit unions have formed networks of surcharge-free ATMs that members can use. This isn't much of a disadvantage anymore, since credit union ATM networks have grown more extensive.

  • Some credit unions don't return cancelled checks to you. But then, these days, many traditional banks have stopped doing this, too.

  • Your local credit union may not offer you as many services as you can get from the neighborhood bank. Check to see what's offered. You may end up deciding to keep accounts at each, for different purposes. (On average, though, credit unions have been adding services over the years.)

Learn more about credit unions at the website of the Credit Union National Association. You can search for credit unions in your neighborhood at Not everyone is eligible to join one, but tens of millions of Americans are -- so don't assume you're out of luck. You may be able to join one through your employer, community, religious group, or some other association. If your employer isn't affiliated with a credit union, consider asking your benefits office to look into developing an affiliation.

Learn more in our All About Banking area. Our Savings Center is helpful if you're thinking about how to best deploy your short-term moolah (it offers Fools some special deals on interest rates). And you can learn all about brokerages and find one that's right for you in our Broker Center.

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