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Credit Union Pros and Cons

Credit unions have advantages and disadvantages; let's review some of each.


  • 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.

  • Not all are insured. The National Credit Union Administration insures roughly 97% of credit union member deposits up to $100,000, but a few credit unions remain uninsured. Before signing up with a credit union, ensure that it's insured.

  • Some credit unions don't return canceled 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 Credit Union National Association's website. That's also where you can search for credit unions in your neighborhood. 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. And you can learn all about brokerages and find one that's right for you in our Broker Center.

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  • Report this Comment On October 25, 2011, at 3:18 PM, llynass wrote:

    I agree that Credit Unions serve a viable option for many people but there are a few other cons that you have they don't pay taxes and they aren't regulated near as tough as banks and thrifts. As congress allows them to make riskier loans like commercial real estate and others, without the supervision of the OCC or FDIC, the more likely they will run into some of credit problems and place thier customers deposit at a higher risk. Community Banks are regulated by the OCC and FDIC and are great option with strict supervision. Oh yeah, about the taxes.....come on. We all need to pay our fair share.

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