Individuals who join a credit union are members, not simply customers. Credit unions require only a small initial deposit, often as low as a dollar, which then provides members access to all the services offered. In addition to services comparable to those of a bank, members usually enjoy lower fees, lower interest rates, better returns on savings, and better customer service. In order to join a credit union, you must be a member of a group affiliated with one. Community and religious groups, businesses, associations, unions, and employers are among those offering affiliation.

Credit unions are owned by members and are not-for-profit entities, unlike banks that are profit-focused and responsible to a board and shareholders. Credit unions are able to provide greater disclosure because no conflicting loyalties are present. They have democratic ownership and control and a voluntary board of directors. While credit unions can avoid many problems that affect banks, they are still prone to downturns because of regional unemployment and economic conditions.

Credit union branches may be limited in number, but a network may offer a shared system of automated teller machines (ATMs) to increase member access. Finding a machine that allows you to avoid fees may take some research. Customers may decide it is best to have an account at both a bank and a credit union in order to experience all the advantages offered by each.

One of the major cons of joining a credit union involves cross-collateralization. If you have an unsecured credit card and a secured loan at the same credit union, in the event of a default or bankruptcy, the credit card balance may become attached to your loan, or you may lose money deposited in your credit union account. Also, some credit unions are not FDIC insured, which means that your account may not be protected from loss.

Credit unions do attempt to help customers, through education and assistance, in times of need. They may create a loan modification or adjustments in terms. Should an application for credit be denied, a customer could request the opportunity to have the case reviewed by committee. The credit union may ask that a course in financial management be completed in order to grant approval, but unions often give the member greater recourse than a bank customer would have in such cases.

For more information on credit unions, try:

-     Credit Union National Association (CUNA):  http://www.cuna.org

-     National Credit Union Administration (NCUA):  http://www.ncua.gov/

-     CO-OP Financial Services:  http://www.co-opfs.org

-     CreditCards.com:

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