How to Join a Credit Union

Quick answer

• Credit unions offer competitive rates and a member-focused approach.
• Joining typically requires meeting a field of membership (FOM) criterion.
• FOM can be based on employer, location, association membership, or family ties.
• You’ll need identification and an initial deposit to open an account.
• Credit unions are not-for-profit and profits are returned to members.
• Compare offerings from multiple credit unions to find the best fit.

Who this is for

• Individuals seeking banking alternatives with potentially better rates and lower fees.
• People who value a more personalized and community-oriented financial experience.
• Anyone who meets the membership eligibility requirements of a specific credit union.

What to check first (before you act)

Goal and timeline

Before you start exploring credit unions, clarify what you want to achieve with your banking. Are you looking for a checking account with no fees, a savings account with higher interest, or a loan with favorable terms? Knowing your primary goal will help you compare credit unions more effectively. Your timeline is also important; if you need a new account immediately, focus on those with straightforward online application processes.

Current cash flow

Understand your typical income and spending patterns. This will help you determine the types of accounts and services you’ll need. For example, if you have a lot of transactions, you’ll want a checking account that handles them easily. If you’re saving for a specific purchase, knowing your savings capacity will guide your choice of savings products.

Emergency fund or safety buffer

Ensure you have an adequate emergency fund before making significant changes to your banking. This fund should cover 3-6 months of essential living expenses. If you don’t have one, focus on building this buffer first, even if it means delaying a credit union switch. Having this safety net provides peace of mind and prevents you from dipping into savings for unexpected events.

Debt and interest rates

Review any outstanding debts, such as credit cards, auto loans, or student loans. Note the interest rates on each. Credit unions often offer competitive loan rates, so it might be beneficial to explore refinancing options once you’re a member. However, prioritize paying down high-interest debt regardless of where you bank.

Credit impact

Joining a credit union typically involves opening a new account, which may result in a “hard inquiry” on your credit report if you’re also applying for credit products like a loan or credit card at the same time. While opening a checking or savings account itself usually doesn’t impact your credit score, applying for a new credit product does. Be mindful of how many new credit accounts you open within a short period.

Step-by-step (how to get into a credit union)

1. Identify your eligibility:

• What to do: Research credit unions in your area or those related to your employer, affiliations, or family. Many credit unions have expanded their fields of membership (FOM) to include broader community ties.
• What “good” looks like: You’ve found at least one credit union where you clearly meet the membership requirements.
• Common mistake and how to avoid it: Assuming you don’t qualify. Many credit unions allow membership through a small donation to an affiliated charity or joining a specific association, which can be a low barrier to entry. Check the “About Us” or “Membership” section of their website.

2. Research potential credit unions:

• What to do: Compare the services, rates, fees, and branch/ATM accessibility of credit unions you’re eligible for. Look at their checking, savings, loan, and mortgage products.
• What “good” looks like: You have a shortlist of 2-3 credit unions that seem like a good fit based on your financial needs and preferences.
• Common mistake and how to avoid it: Only looking at one option. Different credit unions excel in different areas. A broad comparison ensures you find the best overall value for your situation.

3. Review membership requirements in detail:

• What to do: Visit the credit union’s website or call them to confirm the specific documents and steps needed to join. Pay close attention to any minimum deposit requirements for opening an account.
• What “good” looks like: You understand exactly what documentation you need (e.g., driver’s license, Social Security number) and the initial deposit amount.
• Common mistake and how to avoid it: Showing up unprepared. This leads to wasted trips and potential frustration. Gather all necessary documents beforehand.

4. Gather required identification and information:

• What to do: Collect your government-issued photo ID (like a driver’s license or passport), Social Security number, and proof of address if required.
• What “good” looks like: You have all the necessary identification and personal information readily available.
• Common mistake and how to avoid it: Forgetting a crucial document. This can delay your application process significantly. Double-check the credit union’s list of required items.

5. Initiate the application process:

• What to do: Apply online through the credit union’s secure website or visit a local branch. Online applications are often faster for basic accounts.
• What “good” looks like: Your application is submitted accurately and completely.
• Common mistake and how to avoid it: Rushing through the application. Typos or incorrect information can lead to processing delays or even rejection. Take your time and review each field.

6. Make the initial deposit:

• What to do: Fund your new account with the minimum required deposit. This is often a small amount, sometimes as low as $5, which may be deposited into a membership share account.
• What “good” looks like: Your account is successfully opened and funded.
• Common mistake and how to avoid it: Not having the funds available. Ensure the money is accessible in your current account to avoid overdraft fees or a failed transaction.

7. Activate your new accounts and services:

• What to do: Set up online banking, order checks if needed, and activate your debit card once it arrives.
• What “good” looks like: You can log in to your online account, your debit card is active, and you’re ready to use your new banking services.
• Common mistake and how to avoid it: Delaying activation. This can leave you without access to your funds or unable to make payments. Complete activation steps promptly.

8. Transition your finances (gradually or quickly):

• What to do: Update your direct deposit information with your employer and set up automatic payments from your new accounts. Gradually phase out your old bank accounts.
• What “good” looks like: Your income is being deposited into your credit union account, and automatic bills are being paid from it.
• Common mistake and how to avoid it: Forgetting to update all automatic payments or direct deposits. This can lead to missed payments, late fees, or bounced checks. Create a checklist of all recurring transactions.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Not verifying membership eligibility	Application denial, wasted time and effort.	Carefully read the FOM requirements and contact the credit union if unsure.
Only checking one credit union	Missing out on better rates, lower fees, or superior services elsewhere.	Compare at least 2-3 credit unions before deciding.
Incomplete or inaccurate application	Application delays, rejection, or account issues later on.	Double-check all fields for accuracy and completeness before submitting.
Not understanding fee structures	Unexpected charges, higher costs than anticipated.	Read the fee schedule carefully and ask questions about any unclear fees.
Forgetting to update automatic payments	Missed payments, late fees, potential damage to credit score.	Create a comprehensive list of all recurring bills and update them systematically.
Not activating debit card/online access	Inability to use funds or manage accounts conveniently.	Follow the credit union’s instructions for activation immediately upon receiving new cards or login info.
Opening too many new accounts at once	Potential negative impact on credit score due to multiple hard inquiries.	Space out applications for new credit products if you’re also applying for loans or credit cards.
Assuming all credit unions are the same	Not finding the best fit for your specific financial needs and goals.	Research and compare offerings based on your priorities (e.g., savings rates, loan terms).
Not understanding the cooperative model	Misunderstanding how profits are distributed or member benefits are realized.	Learn that credit unions are not-for-profit and member-owned, with profits reinvested for members.

Decision rules (simple if/then)

• If your primary goal is to earn the highest possible interest on savings, then compare the APY (Annual Percentage Yield) offered by different credit unions before joining because higher APY means more earnings.
• If you frequently use ATMs outside of your bank’s network, then check the credit union’s ATM network and any ATM fee reimbursement policies because this can save you money on withdrawal fees.
• If you have a history of overdrafts, then look for a credit union that offers overdraft protection options or has more lenient policies because this can prevent costly fees.
• If you are looking for a loan (auto, personal, mortgage), then compare the interest rates and terms offered by the credit union to your current lender or other financial institutions because credit unions often have competitive rates.
• If you are concerned about fees, then scrutinize the credit union’s fee schedule for checking accounts, savings accounts, and other services because some credit unions may have fewer or lower fees than traditional banks.
• If you are eligible for membership through multiple credit unions, then consider the one with the most convenient branch locations or a robust online/mobile banking platform because accessibility is key to regular use.
• If you value community involvement and a mission-driven approach, then research the credit union’s involvement in local initiatives because this aligns with their cooperative philosophy.
• If you are applying for a loan or credit card along with opening an account, then be aware of potential credit score impacts and inquire about the inquiry process because it might affect your credit report.
• If you have specific account needs (e.g., business accounts, joint accounts), then confirm that the credit union offers these services and has a smooth process for setting them up because not all credit unions cater to every type of customer.
• If you are looking for a long-term banking relationship, then consider the credit union’s stability, customer service reputation, and range of services beyond basic accounts because you may want to utilize more of their offerings over time.

FAQ

What is a credit union?

A credit union is a not-for-profit financial cooperative owned and controlled by its members. Profits are returned to members in the form of lower loan rates, higher savings rates, and lower fees.

How do I know if I’m eligible to join a credit union?

Eligibility is determined by a credit union’s “field of membership” (FOM). This can be based on where you live, work, worship, attend school, or through membership in a specific organization, or by being related to a current member.

Are credit unions safe?

Yes, credit unions are very safe. Your deposits are insured by the National Credit Union Administration (NCUA) up to at least $250,000 per depositor, per insured credit union, for each account ownership category. This is equivalent to FDIC insurance for banks.

What’s the difference between a credit union and a bank?

Banks are for-profit institutions owned by shareholders, focused on maximizing profits. Credit unions are not-for-profit, member-owned cooperatives focused on serving their members’ financial needs.

How much money do I need to join a credit union?

Most credit unions require a small initial deposit to open a membership share account, often as little as $5 or $25. This deposit establishes your ownership stake in the credit union.

Can I join a credit union if I don’t live near a branch?

Many credit unions have expanded their fields of membership to include broader geographic areas, and most offer robust online and mobile banking services, allowing you to manage your accounts from anywhere.

Will joining a credit union affect my credit score?

Opening a basic savings or checking account at a credit union typically does not affect your credit score. However, applying for a loan or credit card from a credit union will involve a credit check, which can have a temporary impact.

Are credit unions better than banks?

“Better” depends on your priorities. Credit unions often offer more competitive rates and lower fees due to their not-for-profit status, and a more personalized service. Banks may offer a wider range of services or a larger branch network.

What this page does NOT cover (and where to go next)

• Detailed comparisons of specific credit union products (e.g., exact savings account APYs, mortgage rates).
• Next topic: Researching specific financial products.
• In-depth analysis of credit union investment services or business banking options.
• Next topic: Exploring specialized financial services.
• Legal requirements or regulations specific to credit union operations beyond member rights.
• Next topic: Understanding financial regulations.
• The process of disputing credit union fees or resolving account issues.
• Next topic: Customer service and dispute resolution.