AARP Eye Center
Are you tired of your big bank charging high fees, paying little on deposits and providing poor customer service? If so, you may want to consider credit unions.
A credit union is similar to a bank, but it is owned by its members. Because of this, it’s considered a nonprofit organization. This gives credit unions two advantages over banks: They don’t have to pay income taxes, and they don't have to pay dividends to shareholders. This allows credit unions to pay higher interest rates than banks, and charge less for loans, too.
AARP Membership — $12 for your first year when you sign up for Automatic Renewal
Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP The Magazine.
I know many bank officers who think the credit unions’ tax-exempt status is unfair, and they have a point. Still, I belong to several credit unions because I’m getting better rates on my money. Here are few points to consider in determining if a credit union is right for you.
You can join a credit union.
As of March 2021, there were 5,174 credit unions in the U.S., according to the Credit Union National Association (CUNA). Those credit unions had a combined 20,916 branches.
Many people assume that all credit unions are closed organizations, open only to a select group, such as employees of a corporation. But many of these credit unions make it easy for anyone to join. For example, one of the credit unions I belong to is Pentagon Federal Credit Union, even though I’ve never served in the military or worked for the federal government. I was able to become a PenFed member after paying a one-time $20 fee to join a charity — but they no longer require even that.
Here is a partial list of credit unions anyone can join. With other credit unions, you may have to live in a specific geographic area or work for a specific company.
Your money is insured, just like money in a bank.
Similar to the bank Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) insures your money at a credit union. Accounts are insured to $250,000 per depositor or $500,000 for a joint account. Your money is just as safe in a credit union as it is with a big bank.