Category: Credit Unions

Abound Credit Union is a Kentucky-based institution that was first established in 1950 as the Fort Knox Civilian Employees Federal Credit Union.¹ The original charter included just 10 members, but it has since grown to more than 100,000 members. As it grew, it changed its name—first to Fort Knox Federal Credit Union, and then, in February 2020, to Abound Credit Union.

Considering an account with Abound Credit Union? This review can help you decide whether the credit union has something to offer you.

• PROS AND CONS
• COMPANY OVERVIEW

Pros

• Get Paid Early expedites direct deposits by up to two days
• Competitive annual percentage yields on share certificate accounts
• No-down-payment mortgage options available

Cons

• Limited branch access
• Limited checking and savings account options
• $250,000 required to maximize money market yields

Who Is Abound Credit Union Best For?

Abound Credit Union offers both branch and online banking with a full line of banking products and services, including checking accounts, savings accounts, and home loans. It’s a good fit for people who:

• Prefer to pay minimal fees for banking
• Want to obtain loans at competitive interest rates
• Want a credit union that specializes in their region
• Are comfortable with a simplified approach to banking

What Does Abound Credit Union Offer?

Abound Credit Union offers all the standard accounts and services you’d expect to find at a financial institution. Being a smaller credit union, it may not match the wide variety of options offered by major banks, but Abound’s accounts will meet many customers’ needs.

Accounts offered include:

• Checking account
• Savings account
• Certificates of deposit
• Money market accounts
• Credit cards

Checking Account

Abound Credit Union offers a basic personal checking account option. It’s a straightforward checking account with few bells and whistles. You won’t earn interest, for instance, and there’s no debit card rewards program.

While the account is simple, it does offer a number of free benefits, including:

• No account fees
• No account minimums
• Direct deposit
• The “Get Paid Early” program, which speeds up direct deposit processing by as much as two days
• Mobile check deposit
• Visa debit card
• Electronic bill pay
• Sending money is free with online or mobile banking

Like most credit unions, Abound offers insurance on deposit accounts—up to $250,000—through the National Credit Union Administration (NCUA).²

Savings Account

It only takes a minimum deposit of $5 to open a savings account with Abound Credit Union. Like checking accounts, the credit union’s savings account is simple. You can access your account by phone, online, through the mobile app, at the ATM, or at a branch location.

However, unlike Abound’s checking account, savings account deposits earn interest. The rates are tiered based on your balance, but you’ll start earning quarterly dividends once your balance hits $100. To land the highest rate for a savings account, you’ll need a minimum balance of $100,000.01.³ These rates, like all rates, are subject to change based on fluctuations of the federal funds rate.

Savings Account Rates (as of Aug. 17, 2020)
Account Balance	APY
$100.00 to $10,000.00	0.05%
$10,000.01 to $50,000.00	0.10%
$50,000.01 to $100,000.00	0.15%
$100,000.01 and up	0.20%

Abound may impose an “Excessive Withdrawal Fee” if more than 12 withdrawals are made within one dividend period.⁴

Certificates of Deposit

Credit unions sometimes refer to certificates of deposit as “share certificates,” “term certificates,” or simply “certificates,” but they’re all the same product. Abound Credit Union offers share certificates with maturity terms ranging from three to 59 months.³

Certificate of Deposit Rates (as of Aug. 17, 2020)
Certificate Term	APY
3 months	0.30%
6 months	0.40%
12 months	0.70%
18 months	0.90%
24 months	1.00%
36 months	1.05%
48 months	1.15%
59 months	1.20%

The credit union also offers a certificate specials:

• 14-month certificate: 1.00% APY

Like regular bank CDs, share certificates are time deposits. That means if you tap into your savings ahead of the certificate’s maturity date you may face a penalty charge. Abound Credit Union bases the amount of the penalty on the certificate term.

A nice benefit is that you don’t need a lot of money to open a certificate account. The minimum amount to get started saving on any timeline is $500.⁴

Money Market Accounts

Money market accounts combine the best features of savings accounts and certificates of deposit. You can make withdrawals when you need to while earning more interest on your balance than you would with a savings account.

The Abound Credit Union money market account has both of those features. As with the savings account, the APY you earn is tiered according to your balance.³

Money Market Account Rates (as of Aug. 17, 2020)
Account Balance	APY
$1,000.00 to $10,000.00	0.10%
$10,000.01 to $25,000.00	0.20%
$25,000.01 to $50,000.00	0.25%
$50,000.01 to $100,000.00	0.30%
$100,000.01 to $250,000.00	0.40%
$250,000.01 and up	0.50%

You’ll need a minimum monthly balance of $1,000 to open a money market account.⁵ If you open an account and then fall below that $1,000 minimum, you may have to pay a “Minimum Balance Fee.” Abound may also impose a fee if you make more than six withdrawals from your money market account in one month.

Savvy Money Market Account

Those with significant savings who don’t anticipate needing to make many withdrawals may prefer the Savvy Money Market Account offered by Abound Credit Union. The Savvy Money Market Account offers 1.00% APY (as of Aug. 17, 2020), more than double the highest APY offered by a standard money market account.³

You need to maintain a minimum balance of $250,000 to enjoy that APY.⁵ You’re also limited to one withdrawal per month.

Neither of the money market accounts offered by Abound Credit Union comes with a debit or ATM card.

Credit Cards

Abound Credit Union offers two types of credit cards:

• Classic Visa
• Platinum Visa

Other Financial Products From Abound Credit Union

Abound offers more than just deposit accounts to its customers. The credit union also offers financial products like:

• Personal loans
• Home loans
• Home equity lines of credit
• Auto, motorcycle, boat, and RV loans
• Business loans, including Small Business Administration loans
• Business real estate loans
• Roth and traditional IRAs
• Brokerage account
• Coverdell Education Savings Account
• Insurance products offered through a partnership with TruStage

Abound Credit Union’s investment accounts are offered through a partnership with CUNA Brokerage.⁶

Abound Credit Union Customer Service

In-person customer service is available at 16 branch locations across Kentucky.⁷ Phone support is available by calling 1-800-285-5669 between 9 a.m. and 6 p.m. Monday through Friday, or between 9 a.m. and 1 p.m. on Saturday.⁸ There’s also an online form to begin an email conversation.

How to Bank With Abound Credit Union

As with any financial institution, you should prepare to provide personal information while opening an account with Abound Credit Union. You can start the process in-person at a branch location, online at aboundcu.com, or by calling 1-800-285-5669.

You’ll need $15 to open an account; $5 represents one share in the credit union, and the remaining $10 is a one-time membership fee.

When you deposit money at a bank or credit union, safety should be at the top of your priority list. One of the primary reasons to use a financial institution is to keep your money safe. Instead of walking around with a month’s worth of cash—risking loss to misplacement, theft, or physical damage—you can hold funds in a financial institution. As a bonus, you might even earn interest.

But what about credit unions, which are similar to banks, but technically not FDIC-insured? In many cases, your funds are quite safe in a credit union, but you need to understand the details.

Federally-insured credit unions are just as safe as FDIC-insured bank accounts. The National Credit Union Insurance Fund (NCUSIF), which is backed by the U.S. Treasury insures your funds. The National Credit Union Administration (NCUA), an agency of the U.S. government, administers NCUSIF coverage.¹

That said, some credit unions are not federally insured.

FDIC Insurance

You’re probably familiar with FDIC insurance, which protects you from bank failures and provides the security that bank customers depend on. The U.S. Treasury backs FDIC insurance, and consumers may be more familiar with FDIC insurance and banks than with credit unions. But both programs are federally backed.

Government Guarantee

According to the NCUA, “the NCUSIF is a federal insurance fund backed by the full faith and credit of the United States government.”² In plain English, that means it’s government-guaranteed, just like FDIC insurance. If your federally-insured credit union fails and the entire pool of money in the NCUSIF is exhausted, the U.S. government promises to come up with any funds needed to replace your savings.

The federal government can raise funds in a variety of ways, including collecting taxes from individuals and businesses. If the U.S. government was unable or unwilling to reimburse you for whatever reason, you’d be out of luck whether you had an account at a bank or a credit union (and you’d have bigger problems to worry about).

The NCUA reports that “Not one penny of insured savings has ever been lost by a member of a federally insured credit union.”³

FDIC and NCUSIF insurance both provide up to $250,000 of coverage per depositor per institution.¹⁴

 If you have less than $250,000 at any insured institution, you’re covered—and you might even be below the limit if you have more than that, depending on what types of accounts you have. For example, if you have an IRA and a checking account at the same credit union, you might receive more than $250,000 of coverage at that institution. 

To find out exactly how much coverage your accounts have, use the NCUA’s Share Insurance Estimator. After listing each account registration (such as an IRA, business account, or joint account), you’ll get a detailed report of your coverage, and you can identify any gaps.

Credit unions are safest when they are federally-insured credit unions. Most credit unions fall into that category, but it’s worth verifying what type of credit union you’re working with. If the credit union’s name includes the word “Federal,” it’s easy—they’re explicitly claiming that NCUSIF protects your funds.

If your credit union’s name does not contain the word “Federal,” it might still be a federally-insured institution. The best way to find out is to research credit unions through the NCUA.

Private Insurance

Some credit unions are not federally insured. These institutions are often very safe, but they don’t have the backing of the U.S. government. As a result, they are certainly less safe than a government-backed credit union.

With these credit unions, your safety depends on how the credit union operates and any insurance (possibly private insurance) available. If you’re not sure what your credit union offers, ask questions about share insurance and who stands behind it. 

Privately-insured credit unions aren’t necessarily bad, but they don’t offer the highest level of safety available. Presumably, they must compensate you for that higher level of risk, and you need to be willing and able to accept that risk.

Credit unions are safe places for cash and cash-like holdings. NCUA insurance generally covers:⁵

• Checking accounts
• Savings accounts
• Money market accounts (but not money market funds)
• Certificates of deposit (CDs)
• IRAs held in share accounts at the credit union

What’s Not Covered 

If you use any other type of investment through your credit union, those holdings are probably not covered by the NCUSIF. Examples of assets that are not insured include, but are not limited to:

• Mutual funds, Stocks, and ETFs
• Annuities and other insurance products
• Items in your safety deposit box
• Other investment vehicles

Credit unions are customer-owned institutions that offer many of the same products and services as banks. They are typically involved in the community, and they may offer an experience that differs from national banks. To learn more about how they work and what to expect, read about the basics of credit unions and see how they compare to banks.

We are committed to researching, testing, and recommending the best products. We may receive commissions from purchases made after visiting links within our content. Learn more about our review process.

Credit unions have a reputation for excellent rates and customer service. They offer essential services like checking accounts, savings accounts, loans, and more, but they’re different from banks. Their customer-owned structure and not-for-profit status often make credit unions a solid choice for your money.

There are great credit unions in every community, so you should certainly check out what’s available in your area. But if you’re not finding what you need (or if you want some ideas for comparison), the credit unions below are some of the best available.

Credit Union	Why We Picked It
Alliant	Best Overall
Blue Federal Credit Union	Runner-Up
Consumers Credit Union	Best for APY
PSECU	Best for No Fees
Wings Financial	Best for Biggest Network of Branches
Navy Federal	Best for Military and Best for Customer Service

Alliant Credit Union: Best Overall

With over $12 billion in assets, Alliant Credit Union is one of the biggest credit unions in the U.S. The institution’s size allows for a solid lineup of products and competitive rates on your deposits. You’ll need to be comfortable banking online if you want to work with Alliant CU, as the credit union is not part of any nationwide shared branching network. In fact, there are no brick-and-mortar locations for in-person service. However, you have access to more than 80,000 surcharge-free ATMs, and you can handle most service needs online.¹

• Savings account pays 0.75% APY
• Interest-bearing checking accounts with no monthly fees
• ATM fee rebates up to $20 per month
• Live phone representatives available 24/7
• Mobile app for managing accounts, customer service, and check deposits
• Broad range of accounts, loans, and services available²³

If you’re not already eligible for Alliant CU membership, you can meet the requirement by joining Foster Care to Success. Alliant CU pays a $5 membership fee for you, and you’ll also need to keep $5 in a shared savings account.³What We Like

• Wide variety of financial products
• Well-established institution

What We Don’t Like

• No branch access for in-person banking

Blue Federal Credit Union: Runner Up

Blue Federal Credit Union pays a high rate on your savings and offers checking accounts with no monthly fees. You can also open a checking account that pays a high dividend on your balance and offers ATM rebates (if you meet certain criteria). With competitive rates, low fees, and access to nationwide shared branching, it’s hard to go wrong with Blue FCU.

• Savings account pays 0.80% APY
• Checking accounts with no monthly fees
• Checking account that pays up to 3.50% APY
• Live phone support available 24/7
• Mobile app for managing accounts and depositing checks
• Broad range of accounts, loans, and services available⁴⁵

If you don’t meet Blue FCU’s family, employer, or military membership requirements, you can join by donating $5 to the Blue Foundation, an advocate for local nonprofits. If you choose this route, you’ll deposit $10 to open your account and Blue FCUwill automatically use $5 for your donation.⁶What We Like

• High rates on savings
• Generous interest rate on Extreme checking account

What We Don’t Like

• $5 incoming wire fee

Consumers Credit Union: Best for APY

If your goal is to earn as much as possible on your checking and savings balances, you might try Consumers Credit Union’s Rewards Checking Account. That account pays up to 4.09% APY on a maximum of $10,000 if you meet certain criteria. To qualify for that rate, you need to: 

• Enroll in electronic documents
• Make at least 12 debit card purchases monthly
• Make direct deposits, mobile check deposits, or incoming ACH transfers of at least $500 each month
• Spend at least $1,000 per month on a CCU credit card
• Open your account with at least $5⁷

CCU is part of the CO-OP shared branching network with free access to nearly 30,000 ATMs.⁸

• Smart Saver savings account pays up to 1.50% APY
• Checking account with no monthly fees
• Mobile banking enables you to manage accounts and deposit checks
• Broad range of accounts, loans, and services available⁹

You can become eligible for CCU membership by joining the Consumers Cooperative Association with a $5 membership fee. You also need to keep $5 in a share savings account.¹⁰What We Like

• High rates on savings
• Generous interest rate on Extreme checking account

What We Don’t Like

• $5 incoming wire fee

Pennsylvania State Employees Credit Union: Best for No Fees

Pennsylvania State Employees Credit Union makes it easy to manage your money without worrying about fees. The checking account does everything you need with no monthly fees, and you can get rebates on fees you pay to other banks for using their ATMs. If you overdraw your account, there’s no charge to transfer funds from a linked savings account.

• No monthly maintenance charge for checking or savings accounts
• Free basic checks
• ATM rebates up to $20 per month
• Free Overdraft Protection Transfer Service for certain transactions
• Mobile app with remote check deposit and other features
• Potential cash-back rewards for debit card spending
• Savings account pays 0.05% APY
• Broad range of accounts, loans, and services available¹¹¹²

To meet the eligibility requirement at PSECU, you can join the Pennsylvania Recreation and Park Society (PRPS) with a $20 donation—and PSECU will cover $10 of that for you. You’ll also need to keep $5 in your savings account.¹³What We Like

• No fees for essential needs
• Cash-back rewards on debit card spending

What We Don’t Like

• Low savings account interest rate

Best Credit Union for Customer Service: Wings Financial Credit Union

Minnesota based Wings Financial Credit Union earns generally high marks in customer service across the board. Anyone in the Minneapolis-Saint Paul metro area, Seattle-Tacoma metro area, or works or has worked in aviation is eligible to join. You can also join the Wings Financial Foundation for $5 to become eligible to join this highly rated credit union.

This credit union offers generally great accounts, including a no monthly fee checking account. This credit union has branches in Minnesota, Michigan, Florida, Georgia and Washington, and offers 60,000 surcharge-free ATMs nationwide through the Co-Op and Allpoint networks. The Signature Rewards program offers cashback on debit purchases as well.

Like most credit unions, Wings Financial offers a range of banking products such as loans and credit cards. Unlike some, it also offers investment and insurance products that allow you to keep your entire financial life with one institution, which is another benefit for those who want to keep things simple.

Navy Federal Credit Union: Best for Military and Best for Customer Service

Navy Federal Credit Union focuses on servicemembers and their families in all branches of the armed forces. The credit union’s banking and credit card customer service earns high marks in Consumer Reports and J.D. Power surveys, signaling that your experience with Navy Federal should be a satisfying one.¹⁴¹⁵

• Savings account pays 0.25% APY
• Checking accounts with no monthly fees
• Potential ATM fee rebates (maximum $240 per year while on active duty)
• Free basic checks
• Mobile app allows you to deposit checks and manage your accounts
• Broad range of accounts, loans, and services available
• Live phone support available 24/7¹⁶¹⁷

Navy Federal Credit Union limits membership to:

• Active duty or retired servicemembers
• Members of the Delayed Entry Program
• Department of Defense civilians, contractors, and retirees
• Family or household members of the groups above

In addition to meeting membership criteria, you’ll need to keep $5 in a savings account.¹⁸What We Like

• Excellent customer service ratings

What We Don’t Like

• Limited field of membership
• Unimpressive savings account rate

How Do You Open a Credit Union Account?

To open an account, you’ll need to complete an application and provide personal information, as you would when opening any bank account. In many cases, you can do this entirely online. Credit unions also require you to meet membership qualifications.

Personal details include things like:

• Names of all account owners
• Date of birth
• Social Security Number or other identifying number
• Government-issued identification details
• Physical address (you can also add a mailing address)

Becoming a Credit Union Member

To qualify for membership, you need to meet certain criteria, such as living in a particular area, working for specific employers, or joining an organization that opens the door to membership. In many cases, the easiest way to qualify for a credit union that you’re not eligible for is to join a nonprofit organization with a modest donation.

Credit unions generally require that you formalize your membership requirement with a “share account” (general term for a credit union savings account.) To do so, you often open a savings account and keep at least $5 or so in that account.

Pros & Cons of Opening a Credit Union Account

Credit unions are community-focused financial institutions that provide basic banking services. They tend to keep rates competitive and fees low, but the details are different at every credit union.What We Like

•  Not-for-profit organizations with no outside investors
• Potential access to fee-free ATMs and branches nationwide with shared branching
• Rates may be better at credit unions than at banks
• Products that help people build credit and avoid predatory lending
• Small organizations may offer personalized, friendly service

What We Don’t Like

• Eligibility requirements may prevent you from joining some credit unions
• Small institutions may lack product offerings
• Branch and ATM locations may be limited

How Should You Choose the Best Credit Union Account?

Examine how you use banking products, and choose the credit union that best fits your needs. It’s crucial to find a credit union that makes your life easy, offers the essential products you need, and keeps fees low. Review the factors below as you compare options:

• Does the credit union charge monthly fees in checking accounts, and if so, can you qualify for a waiver?
• Are savings account rates competitive?
• If you overdraw your account periodically, are there reasonable fees or mechanisms to cover overdrafts from savings?
• Is the website easy to navigate?
• Is there an app, and which features does it include?
• Can you deposit checks with your mobile device?
• Do you pay fees for using other banks’ ATMs?
• Are ATM fee rebates available?
• Are branches convenient for you?
• Does the credit union participate in a nationwide shared branching network?
• If you need to borrow money, does the credit union offer the types of loans you need (auto, home, RV, personal loans, credit cards, and more)?
• Can you pay bills online?

Is Your Money Safe in a Credit Union?

Federally insured credit unions are equally as safe as FDIC-insured banks. Those credit unions use National Credit Union Share Insurance Fund (NCUSIF) insurance, which is backed by the full faith and credit of the U.S. government. That said, you need to verify what type of insurance your credit union uses and keep account balances below maximum limits.

How We Chose the Best Credit Unions

We started with a group of more than 50 credit unions and narrowed down the list to highlight the best offerings available. These credit unions are available to consumers nationwide, and many of them allow you to qualify for membership with relative ease. We evaluated fees for checking and savings accounts, ATM access, rates on deposits, product offerings, and more when selecting the best options. Finally, these financial institutions have deposit insurance to keep your money safe (up to applicable limits).

We survey 90 credit unions every weekday to determine which ones have the best CD rates. We’ve created this list of credit-union-specific CD rates for people who prefer to work with credit unions because they’re customer-owned and often have better rates than banks. The credit unions below are available to customers nationwide, and they’re all federally insured institutions. Your funds are protected through the National Credit Union Administration, up to $250,000 per depositor per institution.

The list below highlights the best credit union CDs by term with a few months of wiggle room on either side of the term to capture the best rates available. Whenever there’s a tie, we favor credit unions with the lowest minimum deposit requirement and the most forgiving early-withdrawal policies.

Here are the best credit union CD rates available as of Sept. 10, 2020.

APYs are changing rapidly amid widespread uncertainty about the economy and financial markets. The Balance is monitoring rates and updating them accordingly.

Term	Credit Union	APY	Minimum Deposit	Early Withdrawal Penalty
3 Months (2–4 months included)	Chevron Federal Credit Union (3 months)	0.80%	$500	3 months of interest
6 Months (5–9 months included)	CommunityWide Federal Credit Union  (6 months)	1.00%	$1,000	Complex formula; exercise caution
1 Year (10–14 months included)	MAC Federal Credit Union (12 months)	1.10%	$1,000	1 month of interest
18 months (15–20 months included)	Pen Air Federal Credit Union (18 months)	1.05%	$500	6 months of interest
2 Years (21–29 months included)	MAC Federal Credit Union (24 months)	1.25%	$1,000	3 months of interest
3 Years (30–41 months included)	MAC Federal Credit Union (36 months)	1.45%	$1,000	3 months of interest
4 Years (42–53 months included)	MAC Federal Credit Union (48 months)	1.50%	$1,000	3 months of interest
5 Years (54–66 months	Greenwood Credit Union (60 months)	1.50%	$1,000	6 months of interest
10 Years (114–120 months included)	Apple Federal Credit Union (120 months)	1.10%	$500	1,095 days of dividends

Chevron Federal Credit Union: Best 3-Month CD

If the logo for Chevron Federal Credit Union looks a little familiar, there’s a good reason why. This credit union was founded in 1935 and has over 100,000 members. It primarily serves members employed by the Chevron Corporation (i.e., the gas stations you’re probably familiar with). If that’s not you, you can also join by making a $15 donation to join the Contra Costa County Historical Society, which makes you eligible for credit union membership. You’ll also need to keep $25 in a savings account, which is a tad higher than most credit unions. 

In addition to Chevron FCU branches in California, members have access to over 5,000 CO-OP shared branches and 85,000 fee-free ATMs nationwide. Chevron FCU also offers checking and savings accounts, loans, and other services.

CommunityWide Federal Credit Union: Best 6-Month CD

CommunityWide Federal Credit Union was founded in 1967 and is based in northern Indiana. If you don’t live in the area or meet its employment-based membership criteria or have a family member who’s already a member, you easily can join by becoming a donor member of a partner organization such as the Marine Corps League of St. Joseph Valley, which starts at $15 per year. You must deposit $5 in savings. It’s also part of the CO-OP shared branching network.

MAC Federal Credit Union: Best 1-Year, 2-Year, 3-Year, and 4-Year CDs

MAC Federal Credit Union offers members financial products like checking, savings, and money market accounts, credit cards, insurance, and more. Originally founded in 1952 to serve the active duty and civil service personnel in Fort Wainwright, Alaska, the credit union is now open to anyone who purchases a two-year membership for $40 to the Association of the United States Army. When applying for the membership, just change the chapter to the Polar Bear Chapter in Fort Wainwright, Alaska.

Pen Air Federal Credit Union: Best 18-Month CD

Founded in 1936, Pen Air Federal Credit Union is the largest and oldest local credit union in Pensacola, Florida. Though there are only 15 locations in Northwest Florida and Southeast Alabama, there are more than 111,000 members nationwide.

In addition to CDs ranging in terms from three months to five years, Pen Air also offers personal and business savings and checking accounts, along with various other types of accounts and lending products.

It may be easier to join Pen Air Federal than some of the other credit unions on this list, as all you need is to join the Friends of Navy Marine Corps Relief Society if you don’t have the other affiliations listed on the Pen Air website. There’s no fee to join because Pen Air will make a $1 donation to the organization for you. You’ll also need to make a $25 deposit in a savings account to join.

Greenwood Credit Union: Best 5-Year CD

Founded in 1948, Greenwood Credit Union is a Rhode Island-based institution that boasts more than $450 million in assets. It offers business accounts alongside personal offerings such as checking, savings, and money market accounts, credit and gift cards, loans, and CDs with 3-month to 5-year terms. The credit union has more than 50,000 members, and the open membership means you don’t have to be affiliated with any particular organization to become one of them. Just open a savings account with $5 to start using its products and services.

Apple Federal Credit Union: Best 10-Year CD

Apple Federal Credit Union was founded in 1956 and has branches in northern Virginia. But customers nationwide can access accounts and use shared locations (including over 53,000 ATMs) through shared branching. If you’re not already eligible to join the credit union, you can qualify by joining the nonprofit Northern Virginia Athletic Directors, Administrators, and Coaches. NVADACA, which supports student athletes, offers membership at $20 per year. To get started with Apple Federal Credit Union, you’ll need to open a savings account with at least $5.

What Is a Credit Union?

Credit unions are financial institutions that provide banking services like checking accounts, savings accounts, and loans.¹ They are customer-owned not-for-profit organizations, and they tend to have a community focus. To join a credit union, you typically need to share a common bond with other customers. For example, you might all work for the same employer or live in the same area. However, some credit unions, like those listed here, are available to customers nationwide. To qualify, you typically need to join a nonprofit organization, often with a small donation.

How Do Credit Unions Differ From Banks?

Credit unions provide many of the same services as banks. But their not-for-profit structure makes them unique. In theory, credit unions primarily focus on serving customer-owners and keeping rates competitive. Without the need to generate profits for outside investors or pay taxes on earnings, credit unions might have an edge. Still, it’s always worth comparing offerings from both banks and credit unions.

Concerned that a credit union is too small? If your credit union participates in shared branching, you can use branches and ATMs at other credit unions for free. The CO-OP shared branching network has over 6,000 branches across the U.S.—more than Wells Fargo or Chase.

“Membership” is another difference. To join a credit union, you must meet specific eligibility criteria. Banks, on the other hand, make their services available to anybody.Pros

• Customer-owned organization designed to serve them
• Competitive rates on loans and deposits
• Community focus
• Government-backed deposit insurance at federally-insured institutions

Cons

• Eligibility requirements may pose hurdles for some consumers
• Small institutions might lack some services
• Some large credit unions lose the community feel and focus

Why Are Credit Union Rates So Good?

Credit unions often pay higher rates on CDs than banks.² Without the need to maximize profits for outside shareholders, credit unions can maximize what they pay out in savings accounts and CDs. Plus, credit unions don’t pay federal income taxes.³ That provides additional resources for offering high rates to members.

How Do CDs Work?

A CD is an account that pays a specified rate for a length of time that you choose.⁴ When you use a CD, you commit to leaving your funds with the bank, and you may have to pay a penalty if you withdraw funds early. Banks and credit unions typically reward you for your commitment by paying higher rates on CDs than they pay on savings accounts.

CDs are “time deposits.” To open a CD, you select a term (six months or three years, for example) and deposit money. Your CD “matures” when the term ends, and you can withdraw the proceeds or reinvest in another CD. If you do nothing, some banks and credit unions automatically reinvest into another CD with the same term.⁵

How Do Early-Withdrawal Penalties Work?

CDs pay more than savings accounts because you promise to keep your money untouched for an extended period. But if you need to withdraw funds, you can often do so—at a cost. An early-withdrawal penalty is a charge you pay to your bank when you take money out before a CD matures.

Penalties are often quoted as a number of days’ worth of interest. For example, a bank or credit union might have the following schedule of charges:

• For terms shorter than one year, pay 90 days of interest
• For terms of one year to five years, pay six months of interest
• For terms greater than five years, pay 12 months of interest

Early-withdrawal penalties typically increase on CDs with longer terms.

What Is a No-Penalty CD?

Some CDs do not have early-withdrawal penalties. You can take funds out of a no-penalty CD at any time without paying additional charges.⁶ You might have to wait at least seven business days after opening the account, but after that, the money is free and clear.

No-penalty CDs offer flexibility, but you may pay a small price to keep your options open. These CDs typically pay lower rates than CDs that feature an early withdrawal penalty (all other things being equal). Still, a no-penalty CD might make sense if you’re setting aside funds for an unexpected need. Likewise, if you think rates might fall, you can use a no-penalty CD instead of a savings account. That strategy allows you to lock in today’s rates (for a while, at least) while keeping your money liquid.

What Is a CD Ladder?

A CD ladder is a strategy that helps you avoid problems that may arise if you put all of your money into one CD.⁷ To use a laddering strategy, purchase multiple CDs with different maturity dates. By doing so, you have CDs mature periodically, and you can use those funds for spending needs. What’s more, as rates rise and fall, a ladder prevents you from investing everything into the lowest-yielding CDs.

For example, if you have $20,000 to invest, you might use the strategy below:

• $5,000 in a 6-month CD
• $5,000 in a 12-month CD
• $5,000 in an 18-month CD
• $5,000 in a 24-month CD

Whenever a CD matures, you put the proceeds into a new 24-month CD. As you cycle through CDs, you have cash available every six months. You can spend that money or reinvest at whatever rates are available.

What Should You Look for in a CD?

Earnings

The rate you earn from a CD is one of the most important aspects. Credit unions typically quote an annual percentage yield (APY), which helps you compare offerings from different places. APY accounts for compounding, so you don’t need to pay attention to compounding frequency if you use this measure.⁸ If you compare interest rates (but not APY), CDs with daily compounding are best, all other things being equal.

Safety

Verify that you buy CDs from a credit union that’s federally insured. NCUSIF insurance is backed by the U.S. government, and your funds are protected up to $250,000 per depositor per institution.⁹

Flexibility

As you evaluate CDs, review early-withdrawal policies. You may need to get your money before maturity, and it’s nice to know how much you’ll pay to do so. If multiple credit unions offer similar rates, consider using CDs with the most liberal early-withdrawal penalties.

Minimum Deposit

Before you commit to a credit union, investigate the minimum purchase requirements for CDs. Depending on how much you have to work with, that may determine where you open an account. CD minimums of $500 are not uncommon, but some institutions require $2,500 or more.

What Are Some Alternatives to CDs?

CDs are excellent for keeping your money safe while maximizing your earnings. If you’re keeping funds in a bank or credit union, a CD probably offers the highest rate. But other vehicles might be a better fit for your needs.

• Savings accounts also pay interest, but you can cash out if you need funds immediately—without worrying about an early withdrawal penalty.
• Money market accounts pay rates that are similar to savings accounts, but they may include tools for spending. For example, you might be able to use a debit card, checks, or online bill pay

Credit unions are nonprofit organizations that provide financial services to their members.¹ If you need to save money, pay bills, or get a loan, a credit union is an all-in-one option for those services.

How Banks and Credit Unions Differ

Credit unions offer many of the same products and services as banks, and the experience of using those services is often roughly the same. However, there are a couple of key differences.

Investor-Owned vs. Member-Owned

Ownership is the main difference between banks and credit unions. When you open an account at a credit union—no matter how small—you become a partial owner of the institution. All credit unions are owned by their customers, who are called members. Banks are owned by investors, who might not be account holders or community members.¹

Credit union members vote for the board of directors. Each member gets one vote, so all members have equal power—thus, members with more money in the credit union don’t get more votes than members who have less.²

For-Profit vs. Non-for-Profit

Unlike banks, credit unions are not-for-profit institutions. Generally, they operate in the best interest of their members. They don’t need to worry about stock prices or corporate investors. However, credit unions are not charities. They must make sound financial decisions, collect revenue, pay salaries, and compete with other institutions.¹

Benefits of Using Credit Unions

Credit unions are often popular with their members, some of whom are fiercely loyal to their institutions.

Preferable Rates and Fees

Because they’re member-owned, not-for-profit institutions, credit unions often pass their success on to members in the form of lower fees, higher interest rates for savings, and lower interest rates for loans compared to those at banks.³ That said, not all credit unions are equal, so it’s always worth comparing rates and fees before choosing an institution.

Community Involvement

Credit unions often play an important part in local economies by offering financial education and outreach and supporting small businesses. They also often support charitable organizations in the community.⁴

Shared Branching 

This is a service that is unique to credit unions. Because credit unions are often local institutions, they don’t usually have a widespread network of branches or ATMs. However, in many cases, it’s possible to use branches and ATMs of other credit unions—for free—through a shared branching network. You can make deposits and withdrawals, pay loans, and more. To use shared branching, both your home credit union and the branch you intend to use need to be part of the shared branching network.⁵

Better Customer Service

Credit unions often outperform banks when it comes to customer service.⁶ If you value building relationships with tellers and loan officers, a credit union or community bank is the best place to find that experience.

Services Available at Credit Unions

Credit unions provide financial services to consumers, businesses, and other organizations. The most common offerings are described here, but every credit union is different.

Share Accounts (Savings)

At a credit union, savings accounts are called share accounts because you—like all other customers—are a partial owner of the credit union.⁷ These are a safe place to keep cash and earn interest on your savings. Certain transfers out of a savings account may be limited each month.

Federally insured credit unions are backed by the National Credit Union Share Insurance Fund (NCUSIF). This government-backed fund covers deposits up to $250,000 per account holder per institution. If your credit union is not federally insured, you still might be protected under a private insurance policy, and your money might be safe, but NCUSIF insurance is best because of the government guarantee.²

Share Draft Accounts (Checking)

Checking accounts at banks are usually referred to as share draft accounts at credit unions.⁸ Just like with checking accounts, share draft accounts allow you to spend your money without monthly limits on payments. There are several ways to access your money, including with paper and electronic checks, debit cards, online payments, and cash withdrawals.

Certificates of Deposit (CDs) 

CDs are like super-powered savings accounts. They often pay more interest than regular savings, but there’s a catch: You need to commit to leaving your money in the CD for a specified amount of time (often one to three years).⁹ If you prefer flexibility, some institutions offer money market accounts, which pay similar interest rates and allow you to access your funds throughout the month.¹⁰

Loans

Loans are available for a variety of uses. Credit unions use the money that other customers deposit to fund loans for borrowers. These include home loans (mortgages), auto loans, personal loans, and credit cards.

Other Services 

At most credit unions, you can also get the following:

• Official checks like cashier’s checks or certified checks are usually offered for a small fee, but you should only need these items for the occasional down payment or other life events.
• Safe deposit boxes are a safe place to keep important documents and small valuables. Your items are stored behind several locks, but you’ll need to retrieve anything you need during banking hours.
• Notary services can be helpful when you need to prove that a signature is valid on official documents. A credit union employee (who must also be a notary public) can place an official stamp on your documents and record the time and date of your signature.

The actual products and services available to you will vary from one credit union to another. Larger credit unions typically offer a broader variety, while small credit unions might keep offerings minimal.

Gaining Member Eligibility

To become a member of any credit union, you need to “qualify” or be eligible to join.² Credit unions are designed to serve individuals and organizations that share a common bond, and people who meet the criteria are known as the field of membership. You can qualify in a number of ways:

Your Job

Your employer might sponsor a credit union or have relationships with credit unions in your area, so you’d have the ability to join those credit unions. Some careers also qualify you to be part of a credit union—so your individual employer doesn’t matter because your occupation gets you in.

Your Location

Some credit unions are open to anybody who lives or works in a geographic area. For example, you could qualify simply because you live in a particular city or county. Even going to school or worshiping in an area you don’t live in can result in eligibility.

To see a listing of credit unions in your area, along with a description of the eligibility requirements, you can search with your zip code at CULookup.com.

A Group Membership

Being a member of certain groups can make you eligible for certain credit unions. Some groups are open to the public, and you can join those groups for the purpose of becoming a credit union member. Other groups (like a homeowner’s association) require that you meet other criteria.

Your Family

If a member of your family is a credit union member, you can most likely join that credit union based on your relative’s eligibility.

Opening an Account

Once you find an institution that you like, becoming a member is as easy as opening an account. The process is the same as opening an account at any bank or credit union. You’ll need to provide information about yourself, bring identification, and make an initial deposit (usually $25 to $100 minimum).¹¹

All credit union customers need to open a basic share (or savings) account. Even if you’re only joining the credit union to get a loan, you’ll need to become a member—which requires that you have a “share” of the credit union.

Both types of institutions provide robust financial services. Banks have fewer eligibility requirements and sometimes more specialized product offerings, but they offer less competitive rates and higher fees. Credit unions are more selective about their members, and small ones may not offer the specialized products you seek, but those who join the field of membership gain access enjoy more attractive rates and fees.

If ownership isn’t important to you, the decision comes down to the products and the rates and fees you seek at the individual institution you’re looking at. And remember: You can maintain accounts at both banks and credit unions to avail the benefits of both.

If you decide to switch to a different bank or credit union, take steps to avoid problems when you move your money. Use a checklist for switching banks to make the process as painless as possible.

The service depends, in part, on the overall culture of the organization. The quality of your interactions with staff may also depend on whom you’re talking to on any given day.

That said, credit unions and small banks are known for providing a more highly personalized level of customer service compared to large banks. With fewer customers and employees, it may be easier for everyone to get to know each other. There’s a good chance you’ll work with the same people each time you visit a branch, and you may develop lasting relationships. Those relationships can potentially make it easier to resolve issues with your accounts.

At large banks, expect a more consistent but less personalized experience. Employees are more likely to have completed a comprehensive training program with rigid protocols for dealing with service issues, giving them little flexibility to accommodate your unique needs.

Participating credit unions also provide service at shared branches, allowing you to visit the branches of other participating credit unions nationwide. You can make deposits and withdrawals at those branches, as well as make transfers and payments, but you may need to work with your local credit union on more complex issues.

You might wonder if it’s safer to hold deposits at a bank than at a credit union. In truth, as long as the institution holds insurance, your money is generally safe at either type of institution.

The safest insurance available comes from the U.S. government.

• For bank accounts, the Federal Deposit Insurance Corporation (FDIC) insures funds with government backing.⁸
• At federal and most state-charted credit unions, the National Credit Union Share Insurance Fund (NCUSIF) protects you with the full faith and credit of the U.S. government.⁹

If an institution goes under, some or all of your money may be insured, meaning lost funds will be replaced. In most cases, your account will end up at a new institution, and you’ll keep the same account number and account balance as before.¹⁰

Under current law, both FDIC and NCUSIF coverage protect up to $250,000 per depositor, per institution. If you have more than that amount to manage, spread your funds among different account registrations or different institutions. It’s also possible to have more than $250,000 insured in one place if you have accounts in different ownership categories.¹¹ For example, your retirement account and your individual checking account at the same institution might be counted separately.

A minority of credit unions offer private insurance coverage, mainly through the company American Share Insurance.

Another important distinction between these two institutional types is that credit unions tend to offer more attractive rates and fees on the whole. Not only are they focused on maximizing profits for members rather than outside investors, but their not-for-profit status exempts them from the same kinds of taxes banks must pay.⁶

 As a result, they tend to offer higher interest rates on savings accounts and CDs, lower rates on loans, and lower account fees than banks.⁷ This combination of benefits allows customers to maximize their returns on deposits and minimize their loan costs.

Banks offer lower rates on customer deposits and higher rates on loans because of their higher tax burden and their motive to maximize profits for investors.However, neither all banks nor all credit unions are the same. Some banks offer more competitive rates than credit unions. It’s best to shop around before assuming a credit union will grant you the better deal.

For most customers—consumers handling personal and small-business finances—the choice of a bank or a credit union won’t limit the products available to you. The basic offerings at both types of financial institutions are virtually the same.⁵

Most banks and credit unions offer:

• Checking accounts
• Savings accounts
• Money market accounts
• Certificates of deposit (CDs)
• Business bank accounts
• Home loans (including purchase loans and refinancing)
• Auto loans for new and used vehicles (including motorcycle and RV loans)
• Land and construction loans

However, a bank is more likely to offer specialized products, such as student loans or trustee services. A smaller credit union may not be able to accommodate your needs, but it never hurts to ask. Some small institutions have partnerships with service providers that allow them to provide these services to their customers.

Both banks and credit unions also offer online banking services and mobile apps for account management, although a bank may offer cutting-edge features faster. Still, both allow you to view accounts, make deposits with your mobile device, transfer money between accounts, and pay bills.