Common Credit Union Myths vs. FactsHaving trouble separating myth vs fact about credit unions? There is a lot of information out there, and we totally understand any confusion. In response, here is a list of common myths, facts, and information about credit unions. We hope it helps!
You have to be part of a “union” to be a member.
This is a common myth and completely false. Though when founded, credit unions did often act as the financial institutions for unions, today’s credit union is a completely different animal.
Every credit union does have membership requirements. They HAVE to in order to in order to remain a not for profit institution. However, most credit unions have quite loose membership requirements, many of which only require you to live in a certain area or close to a certain area.
Switching to a credit union is too much of a hassle.
This is false. In fact, in order to gain your membership, credit unions will do most of the work FOR you and require very little on your part. With MoveCU by your side, it’s the same deal.
That’s if you want to switch at all. You don’t have to completely switch if you don’t want to in order to join a credit union. If you just want to benefit from the lending perks of a credit union, while keeping your bank accounts where they are, that’s fine too.
Credit unions don’t pay any taxes.
Although because they are not for profit, they are exempt from federal corporate income taxes, federal credit unions do pay many other taxes that directly benefit their local cities and communities.
Membership requirements are strict and only certain people can join.
Again, this is generally not true at all. They are required to keep membership requirements to keep their not for profit status, but these requirements are often very loose.
In fact, with most credit unions, they only require you live in a certain area. Though some credit unions do have additional requirements such as membership in the military, membership with a certain school district, etc., this isn’t all of them.
Don’t worry. This is part of how we make it easier for you. With MoveCU, we make sure that any credit union you are shown loan rates offers membership requirements you qualify for.
Credit unions have fewer regulations.
False. Federal credit unions are highly regulated, just like banks. Though instead of being overseen by the FDIC, they are overseen by the NCUA (National Credit Union Administration), which is also a federal institution and backed by the U.S. governement.
Fact: The NCUA was created and put into law by the U.S. Congress in 1970.
You can only join one credit union.
This is not true at all. Just like banks, you can join as many credit unions as you want to!
Credit union membership requires expensive fees.
With some credit unions, you may encounter a monthly maintenance or overdraft fee – but that isn’t any different than what you experience at a bank. In fact, credit union fees are often LESS expensive than all the hidden fees and charges you’ll get at a bank.
As a part owner, you have obligations.
Yes, if you join a credit union, you are a “part owner.” But that just means that YOU are the one benefitting if the credit union makes a profit – through dividends, decreased loan interest rates, lower cost checking accounts, etc. While you will also be asked to participate in elections and events, any participation is strictly voluntary. And if an event is hosted, often fun!
Credit union technology is…way behind.
This is true and false. In comparison to banks, many of the smaller credit unions are lagging when it comes to technology. However, we can tell you that MOST credit unions aren’t. In fact, online and mobile banking, remote deposit, and virtual payment services are at every major credit union these days - and at the majority of the smaller ones too.
Credit unions don’t have many branches or ATMs.
For most credit unions, even the small ones, this isn’t true. Years ago, credit unions realized that this was an issue for them. Especially the smaller ones. So they came together and found a solution, collectively forming the CO-OP Shared Branches and ATMs.
What does that mean? For credit unions that have access to this network, it means nationwide access to over 30,000 fee free ATMs and over 5,600 shared branches (a shared branch being a credit union you can visit and use just like it were your own to make fee free deposits, etc.). That means easy nationwide access to your accounts, anywhere you are.
Credit unions have lower interest rates on loans.
This is a true one. Because credit unions serve their members and not investors, they have the ability to turn their profits into lower loan rates, and services with less (or often no) fees. Generally, their loan rates are low enough, banks just can’t compete. This isn’t true every single time – but most of the time, it is.
Credit unions are more invested in their communities and members.
Credit unions are local and often more invested in their communities. Because of that, you will benefit from better service, lower rates, and more help in times of crisis than with a bank. They also often incorporate a lot of local giving and philanthropy into their annual activities, giving back to their communities in multiple ways.
Fact: Most credit unions in the U.S. were formed because of deep frustrations with banks. After the Great Depression hit, professional, middle class and poorer people couldn’t get a loan or financial assistance, no matter how hard they fought with banks. Banks were unwilling or unable to take a risk on them. This was obviously a huge problem.
How did they solve it? By pooling their money together and forming credit unions. Today, credit unions don’t forget their roots and often still offer more assistance and help than banks to underserved populations.
For-profit banks vs. not for profit credit unions. What does it mean?
It means that when banks make a profit, they are working toward their bottom line and the bottom line of their stockholders. Unless you own stock in their company – and a lot of it - this generally isn’t you.
Credit unions on the other hand are not for profit, meaning all the money they earn goes back to their membership. So, if they turn a profit, so do you, which you will receive in the form of dividends, lower loan rates, less (or no) fees, etc.
Banks insure their money with the FDIC up to $250,000 per account. Is my money protected with credit unions too?
YES. Federal credit unions utilize the NCUA, which is also a federal organization, but for credit unions instead of banks. With the NCUA, you are also insured up to $250,000 per account.
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