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Amber is a former banking writer for NerdWallet. Her work has been featured by USA Today, The Christian Science Monitor and The Associated Press. She holds a bachelor's degree in comparative literature from UCLA.
Amy is a former banking editor and copy editor for NerdWallet. She previously worked as a writer and editor for the Los Angeles Times, the L.A. Daily News and the Hollywood Reporter, among other publications.
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Financial institutions aren't all created equal. Some are big, some are small, some offer great savings rates and others don't pay interest at all. If you’re dissatisfied with your bank, it might be time to look elsewhere.
Here are a few good reasons to give credit unions a try.
Not just a not-for-profit
Unlike banks, which operate for profit, credit unions are member-owned, democratically run not-for-profit organizations. That means you're more than a customer; you're a member, and you get to vote on board directors and other officials. Each member’s vote carries equal weight, regardless of deposits at the credit union.
More favorable rates and lower fees
Credit unions’ not-for-profit status lets them distribute their profits to members through returns on savings and investments. As a result, credit unions provide higher average returns on a national level than traditional banks do. Credit unions' average rates for savings and loan products beat or tied those of traditional banks in every category surveyed, according to a September report by the National Credit Union Administration.
Credit unions charge lower fees on average than traditional banks as well. A 2012 study by the U.S. Public Interest Research Group found that 60% of credit unions provided completely fee-free checking accounts, while only 24% of big banks did.
Community is a priority
Credit unions are known for their personalized service and community engagement. It’s common for them to give out scholarships, donations and grants, or host concerts and volunteer events.
This focus means members receive knowledgeable customer service. Representatives generally try to get to know them and can provide valuable financial education and resources. Credit unions also routinely offer member perks, such as discounted auto-buying services, free financial tune-ups and free credit reviews.
4.60%SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
5.50%*Base annual percentage yield (variable) is 4.75% as of 7/31/23. 5.50% APY reflects a .75% boost available as a special offer with qualifying deposit. Terms apply. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through clients’ brokerage accounts at Betterment Securities.
Min. balance for APY
$0
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
5.55%All Bread Savings APYs are accurate as of 11/30/2023. APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. To open a CD, a minimum of $1,500 is required and must be deposited in a single transaction. A penalty will be imposed for early withdrawals on CDs. At maturity, your CD will automatically renew and earn the base interest rate in effect at that time.
0.50%SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Of course, being rooted in a small community can have drawbacks. Large banks generally have many more branches across the country and more up-to-date technology than credit unions.
But credit unions still offer a variety of savings and investment account choices, and many are part of shared branching and ATM networks, giving members access to thousands of ATMs and branches nationwide. And though the technology might not be cutting-edge, popular features such as mobile and online banking are now available at virtually every credit union.
How can I join a credit union?
To qualify for membership in most credit unions, you simply have to live, work, go to school or worship in the area they serve. That said, there are several top-notch credit unions that you can easily join with only a $5 to $10 initial donation.
Before you make the switch to a credit union, compare its services to banks in your area to make sure you’re signing up for the institution that most suits your needs and values.
