How the credit union model can work for you

Unless you’re one of the 135 million U.S. consumers who bank with a credit union, you might not know what a credit union really is. Like balancing a checkbook or creating a budget, the intricacies of how credit unions work — and how they differ from traditional banks — aren’t often covered in basic financial education.

Understanding the institution where you keep your money can be key to your financial success, and moving your savings to a credit union account could help you make the most of the perks credit unions offer members. John Kornacki, the Director of Asset Liability Management at DCU, said there are some serious advantages to choosing a credit union. “Credit unions provide a safe, insured environment for depositors, much like banks, with the added benefits of being not-for-profit institutions that prioritize member benefits over profits,” he explained.

Perhaps the biggest difference between credit unions and other banks is that credit unions are member-owned. Unlike banks that are owned by shareholders, credit unions are owned and democratically controlled by the members through a board of directors, volunteer members who serve as elected representatives of the member base. “This member-centric approach fosters a community-oriented environment where decisions are made with the members’ best interests in mind,” Kornacki said.

Another important distinction is that credit unions are not-for-profit institutions. “Credit unions’ not-for-profit status is crucial because it aligns their operations and goals directly with the interests of their members,” Kornacki explained. That often translates to better offerings for members, including higher rates of return on savings accounts, lower interest rates on loans, and lower fees in general.

“[Credit unions] are led by volunteer board members who represent and are elected by the membership,” Kornacki said, which means they’ll typically prioritize member well-being over profit. In practice, that means credit unions tend to put a primary focus on their members’ experiences. Because credit unions are community-minded and member-owned, they often cater to people who live in a specific region, work at a specific employer, or have a certain type of job and therefore tailor their services to meet members’ needs. “Credit unions often invest in community development and financial education,” Kornacki said, which helps strengthen the communities they serve. That could look like free financial education, local workshops, online learning tools, or personalized financial coaching for members — all at no additional cost to members.

Since many credit unions aren’t as big as traditional banks, Kornacki said sometimes people hold the misconception that they’re not as technologically savvy. But in fact, “a growing number of credit unions are investing heavily in digital banking technology,” he said. In fact, many credit unions — including DCU — offer online and mobile banking, just like traditional banks.

In order to join a credit union, you’ll need to meet its membership requirements — but with more than 4,700 credit unions in the United States, it’s easy to find one that fits your goals and community. “Many credit unions have expanded their membership criteria significantly, allowing much of the public to access their services,” Kornacki explained. Some credit unions are open to people affiliated with certain employers or organizations, or people who live or work in a specific area. Others, like DCU, will even allow you to join by becoming a member of a nonprofit organization. “Our inclusive membership policy means anyone can join, through an existing affiliation or a simple one-time donation of just $10 to one of our listed organizations,” Kornacki said.

Credit unions can be as easy to access as traditional banks, too. In addition to mobile and online banking, DCU members can visit one of the 23 branches in Massachusetts and New Hampshire, or go to any of the 5,900 locations of CO-OP Shared Branches — part of a network of credit unions that accept member transactions on behalf of other credit unions. DCU members can also use more than 80,000 surcharge-free ATMs across the country. Visit DCU’s website to find out why more than 1.1 million people choose to bank with the credit union, and start your membership application today.