Tips on How to Open a Credit Union Account: A Step-by-Step Guide

January 3, 2020 | Mission Fed

Having an account at a financial institution allows you to enjoy many important financial services. It gives you a secure place to store your money, the ability to use a debit card instead of cash, and a way to earn dividends on your savings. You’ll also be able to apply for credit cards, loans, and mortgages.

For many people, banks are the first financial institution that comes to mind. Banks are convenient, well-advertised, and widely-used. However, they aren’t the only option. There’s an alternative that boasts impressive benefits, like better interest rates, great customer service, and lower fees.

This alternative is the credit union. If you want to enjoy the perks of a credit union account, you’re in the right place. This guide will teach you what to look for in a credit union, how to find one near you, obtain membership, and open your account.

Why Open a Credit Union Account?

When you open an account with a credit union, it provides you with financial flexibility and can save you money. Due to their reduced fees and superior interest rates, the Credit Union National Association (CUNA) estimates that credit unions provide an average of $117 of annual benefits to its members, compared to traditional banks.

Furthermore, many credit unions are renowned for their superior customer service. Compared to traditional banks, credit union staff are often more accommodating because they are not tightly bound by traditional banks’ desires to enrich their shareholders. They go above and beyond to provide personalized service. Many credit unions even offer financial education to their members. This is because credit unions sincerely value their members’ financial wellbeing, and do not seek to profit from their members.

Why is this? It all stems back to the credit unions’ business model.

How Do Credit Unions Differ From Banks?

What is a federal credit union and how does it differ from a bank? Credit unions differ from banks in a few notable ways. These differences constitute the basis for why they’re able to offer so many desirable benefits:

  • Credit unions are not-for-profit institutions – As not-for-profit institutions, credit unions aren’t beholden to shareholders, so they’re free to pursue the best interest of their members at all times. This allows them to be much more customer-oriented. Some banks, on the other hand, have sacrificed customers’ interests in the pursuit of greater profits.
  • Credit unions are based on membership – To open an account at a credit union, you must become a member. Once you’re a member, you are considered a part-owner of the credit union. You have the right to vote on important decisions within the organization. To gain membership, you must share a common bond with the rest of the credit union members, which can be based on a variety of factors.

Credit unions are set up to serve their members first. That’s why 118 million Americans have joined credit unions.

What Are The Benefits of Opening a Credit Union Account?

Now that you understand how credit unions work, let’s explore the myriad benefits that a federal credit union account will bring:

  • Lower fees
  • Higher dividend rates for savings accounts
  • Lower interest rates for loans
  • Lower interest rates for credit cards
  • More options for people with poor credit
  • Community-focused interests
  • Financial education initiatives

Once you learned how much interest savings accounts earn and reviewed all other benefits, you’re probably thinking, “Sign me up!” Here is a step-by-step guide on how to do just that.

How To Open a Credit Union Account

To enjoy all of the benefits that come from a credit union, all you have to do is acquire membership and apply for your account.

Step 1 – Find the Right Credit Union

While there are requirements to join a credit union, all credit unions expect members to share some specific type of common bond. This bond is called the “field of membership,” and it can be based on the following:

  • Your employment – Employers may have relationships with credit unions. As their employee, you’ll gain access to their membership. If your employer doesn’t provide this option, research if there are any credit unions relating to your industry. You may be eligible for membership if you work within a specific industry.
  • Family – Credit unions typically extend membership to the family members of current credit union members. Some are more flexible than others when it comes to extended family. Ask your family if they are active members of a credit union.
  • Your alma mater – As a student or alumni of a specific school, you may be eligible for credit union membership. Ask your school if they have any relationships with credit unions in your area.
  • Location – Credit unions often operated locally. Community-based credit unions may require you to live in the area. You can find credit union branchlocations of these credit unions with a quick online search.
  • Your religious affiliation – There are also credit unions which are faith-based. If you are a member of a church, synagogue, mosque or any religious group; ask your fellow worshipers if they’re involved in a credit union.
  • Other membership-based programs – If you belong to a labor union, homeowner’s association, or another membership-based program; look into whether they have a credit union that you can join.

As you can see, you may be eligible for a credit union membership. You just need to do a little research and ask around. You can also use the National Credit Union Administration’s search tool to find the credit unions in your area. It’s always worth giving credit unions a call, too.

Step 2 – Become an Official Credit Union Member

Once you’ve discovered a credit union you’re eligible to join, it’s time to become an official member. You will be asked to purchase a share of the credit union. These shares are inexpensive, generally $1 to $25.

The great thing about membership is that it lasts for your entire life. If you change jobs, move away, or fall out of your initial membership requirements, you’ll still maintain membership. The only thing that can bring your membership into question is if you fall out of good financial standing.

Once you’ve established your membership, it’s time to apply for an account.

Step 3 – Gather the Necessary Documents

Like with any other financial account, you’ll have to provide some documentation to open your account. Your credit union will have its own list, but in general, expect to provide the following:

  • A current, valid photo ID – To verify your identity, make sure you have your driver’s license, passport, state ID, or another form of valid government ID.
  • Proof of address – To verify your address, you need to bring in something that was sent to your address with your name on it. Bills or bank statements will suffice.
  • Identification Number – You’ll need your Social Security number or Individual Tax Identification Number.
  • Money – To fund your new account, make sure you bring in some money to transfer into it.

If you’re a business owner, you will also need the following:

  • Your Business EIN Number
  • Documentation of your business incorporation
  • Signatures from other business partners

With these documents in hand, you’re all set to apply.

Step 4 – Open Your Account

You may apply online, or within your credit union’s branch establishment. If you choose to open it online, feel free to call your credit union for assistance. You’ll get an initial glimpse of the amazing customer service they provide.

You will need to make an initial deposit upon opening a new account.

You can fund your initial deposit in the following ways:

  • Cash
  • Check
  • Money transfer via routing and account numbers

Evaluating Your Credit

Credit unions are known to be more forgiving to members whose credit needs improvement. If you’ve been turned down by a traditional bank on the basis of poor credit, you may still be able to get a loan from a credit union. Speak with a credit union staff member to see what they can do for you whether it’s a savings account, free checking account, or loan.

Enjoy Superior Financial Services with a Credit Union Account

Now that you know how to apply for a credit union account, all that’s left is to get started. You just need to become a member and set up your account as you would at any other financial institution. Once you’ve taken the above steps, you’ll be in a position to enjoy competitive interest rates, reduced fees and payments, and amazing customer service that comes with credit union membership.

If you’re looking to join a trustworthy credit union in the San Diego area, Mission Fed is the perfect choice. Mission Fed has been serving the San Diego community with excellence for over 50 years. It’s a convenient one-stop-shop for your financial services. Most importantly, Mission Fed puts its members first every step of the way!

The content provided is intended for informational purposes. Mission Federal Credit Union disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article does not constitute endorsement, control or warranty by Mission Federal Credit Union.

Sources:

Credit Union National Association. The Benefits of Credit Union Membership - Third Quarter 2019.
https://www.cuna.org/uploadedFiles/Global/About_Credit_Unions/National-MemberBenefitsS19.pdf

National Credit Union Association. Quarterly Credit Union Data Summary 2019 Q2.
https://www.ncua.gov/files/publications/analysis/quarterly-data-summary-2019-Q2.pdf

Mission Fed

Mission Fed

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