Are you thinking of switching from a bank to a credit union but don't know how to go about it?
No worries! If you've ever considered making the move but have hesitated due to concerns or uncertainties, we're going to shed some light on the process.
In this post, we discuss:
- The numerous benefits and advantages of transitioning from a bank to a credit union
- How to make the move from your current bank to a credit union
- Tips for minimizing the time and effort involved in changing your banking partner
Why Consider a Credit Union
When it comes to bank vs credit union, you might be surprised to learn that credit unions are strong contenders. Credit unions have been around for a long time, earning their good reputation.
Credit unions offer numerous benefits and advantages over traditional banks. This makes them a compelling option if you're debating where the best place to do your banking is.
Here are some reasons you should think seriously about becoming a credit union member:
- Member-focused approach. Credit unions are member-owned-and-operated non-profits. This means that their primary focus is on serving their members' best interests, rather than maximizing profits for shareholders. This approach usually means better rates, lower fees, and personalized customer service for you.
- Personalized service. With credit unions, you're more than just an account number. They prioritize building relationships with their members and take the time to understand their unique financial needs. This personalized service can make a significant difference in your banking experience.
- Community involvement. Credit unions are invested in their communities. They often support local initiatives, charities, and community development projects, fostering a sense of belonging and contributing to the overall well-being of the community.
- Competitive rates and fees. Credit unions are known for offering better interest rates on savings, loans, credit cards, and dividends. Additionally, they often have lower fees compared to traditional banks, helping you save money in the long run.
- Access to shared branches and ATMs. Many credit unions participate in shared branching networks, allowing you to conduct transactions at other credit unions across the country. Additionally, credit unions often offer fee-free access to a large network of ATMs, providing convenient access to your funds.
This is just the tip of the iceberg. Transitioning from a bank to a credit union is a relatively straightforward process, and the benefits — like the ones we highlight here and more — can make it worth your while.
Types of Accounts at Credit Unions
Did you know that credit unions rival (or surpass) regular banks in terms of the kinds of products and services offered? You're bound to find plenty of accounts to meet your financial needs at a credit union.
While each credit union is unique — so it's essential to research and compare the offerings of multiple credit unions before making a decision — you shouldn’t have any trouble establishing accounts for everyday transactions, longer-term wealth-building, and everything in between.
For example, at Valley Credit Union, your options include:
Savings Accounts
You can open a savings account at your credit union. Credit unions often pay higher interest rates on savings accounts compared to conventional banks. Some credit unions may have specific types of savings accounts, such as youth savings accounts or holiday savings accounts, to help you save money for future goals.
Certificates of Deposit (CDs)
Credit unions commonly feature a range of CDs, which are time deposits that earn a fixed interest rate over a specific period. CD terms can vary, ranging from a few months to several years. Expect credit union CDs to have rates that are competitive with those of banks.
Individual Retirement Accounts (IRAs)
If you're looking for a way to save for retirement, credit unions often provide different IRA accounts. Your credit union may offer traditional or Roth IRAs as well as other types of retirement accounts (e.g., 401Ks). Like banks, credit unions offer tax advantages for contributing to IRAs.
Checking Accounts
Another standard offering is checking accounts. Unlike many banks, credit unions may provide checking accounts with lower or no monthly fees. These days, you might also see the option for interest-earning checking accounts, allowing you to earn a return on your balance.
Loans & Credit Cards
You'll have no shortage of loan options with a credit union. Most credit unions offer auto loans, home loans, personal loans, and credit cards — with competitive interest rates and favorable terms. Credit unions typically prioritize the needs of their members, making it easier to qualify for loans and more flexible conditions compared to other sorts of lenders.
The Transition Process
You're convinced that switching from a bank to a credit union is the right move for you — great! That's already a huge step.
But, there are a few more steps you can take to ensure a smooth transition and make the process as seamless, speedy, and stressless as possible.
Bank-to-Credit-Union-Switch Checklist
Check out this checklist to help you execute your migration from your old bank to your new credit union. Feel free to print this section out so you can tick each item off as you complete it.
▢Research and choose a credit union. Explore different credit unions and compare their offerings. Look for a credit union that aligns with your financial needs and values. Verify that you satisfy the member eligibility criteria. Contact the credit unions you're interested in to see what account-opening requirements they have.
▢Gather necessary documents. You may need to provide identification such as a driver's license or passport, proof of address, and your Social Security number. Some credit unions may ask for additional paperwork like employment verification or financial statements.
▢Prepare some funds. Credit unions often require you to make an initial deposit to open an account. So, be prepared to move some money into a new account. Sometimes, depending on the credit union and account type, there are also fees associated with opening an account.
▢Open an account. Visit your chosen credit union online or at your local branch to open an account. Be sure to have all those documents you prepared handy!
▢Transfer your funds. Before closing your bank account, transfer your money to your new credit union account. You can do this by direct deposit, wire transfer, or check (written to yourself and depositing it into your new account).
▢Update automatic payments and direct deposits. Make a list of any automated payments or deposits tied to your old bank account. Provide the companies or individuals with your new credit union account information.
▢Update your payment methods. Replace your old bank account or credit card information with your new credit union account details for any online shopping sites, subscription services, bill payment platforms, etc. that you use.
▢Close your bank account. Once all your funds have been transferred and your linked payments and deposits have been updated, you can close your bank account. Visit your bank branch or contact its customer service to initiate the account closure process.
▢Set up online banking and mobile apps. Once your credit union account is active, sign up for online banking and download the mobile app if available. Familiarize yourself with the features and functionalities to optimize your new banking experience.
▢Explore your new credit union's exclusive benefits. Make the most of your membership! Take advantage of the numerous members-only discounts, deals, and perks your membership affords you.
Frequently Asked Questions (FAQ)
What's the main difference between a credit union and a traditional bank?
Credit unions are member-owned, non-profit financial institutions. Banks, on the other hand, are typically for-profit entities with shareholders to answer to. Credit unions often take a more community-focused approach.
Do I need to be part of a specific group or organization to join a credit union?
Many credit unions — but not all — have membership requirements (e.g., living in a particular area or working for a certain employer).
What types of accounts and services do credit unions offer?
You can get a range of accounts, including savings, checking, certificates of deposit (CDs), and loans (e.g., auto loans, mortgages, etc.) from most credit unions. Online and mobile banking, ATMs, and credit cards are standard fare, too.
Will my money be as safe in a credit union as it is in a bank?
Yes, your money is secure at credit unions. Credit unions are typically federally insured up to $250,000 per account. Modern credit unions also employ sophisticated tech solutions to help safeguard your money. Plus, credit unions tend to be more resilient than regular banks and members report high levels of trust.
Can I keep my existing automatic bill payments and direct deposits when I switch to a credit union?
You’ll need to update your direct deposit information to channel funds to your credit union account. Similarly, you must transfer automatic bill payments to originate from your credit union account by providing your new routing and account numbers to the billers and service providers.
Joining Valley Credit Union, One Great Move
The switch to a credit union is easy, quick, and beneficial — if you're prepared and follow some simple steps.
Here at VCU, we're eager to welcome you into our community and want to make your journey towards a better banking experience as effortless as possible. If you have any questions or need help getting started with the transition from your old bank, just reach out to our talented and dedicated team.
About the Author
Katie Clark, Director of Administrative Services
Katie Clark has been at Valley Credit Union since 2011. She serves as the Board Secretary and oversees Human Resources, Marketing and Facilities for the credit union, some even call her the credit union mom. As a CUNA and GoWest HR council member she stays connected with the latest industry happenings. When she’s not in the office she enjoys weekends with family & drinking wine at the Oregon coast.
