The first credit union in the United States was founded in 1909. Since then, this type of financial institution has grown considerably—there are now over 4,800 credit unions with more than 130 million members across the nation. Here’s a closer look at what credit unions are, how they differ from conventional banks and why you may want to consider becoming a credit union member.
What is a credit union?
A credit union is a not-for-profit member-owned financial cooperative offering traditional banking services, including credit cards, loans and checking accounts. A credit union is owned, operated and controlled by the members who use its services. And because these nonprofit entities aim to serve members rather than maximize profits, members often enjoy reduced fees, affordable loans and higher savings rates.
To join a credit union, you’ll typically need to meet certain criteria, such as belonging to a specific group or organization, working for a partner company, living in a particular geographic region or having a relative who is already a credit union member. For example, Navy Federal Credit Union only allows active-duty members of the military, veterans, Department of Defense employees and their immediate family members to participate.
However, many other credit unions have relatively lenient membership requirements. In those cases, you can often join online by simply opening a savings account and making a small initial deposit—as low as $5 in some cases.
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