Dump Your Bank and Join a Credit Union Instead

If your bank is taking too much of your hard-earned cash in fees, all while denying you decent interest rates on your checking and savings accounts, it may be time to switch to a credit union.
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You don’t always get what you pay for when you do business with a big bank. Low interest rates on deposits and high fees when you step outside the lines—say by using an out-of-network ATM or trying to withdraw more money than you have—hardly seem fair considering that the bank gets to do whatever it wants with your money until you take it out.

It may feel like you have no other choice, but there’s another option that’s been around since the 1800s that has gotten cheaper and easier to use in recent years: credit unions. These not-for-profit organizations offer checking and savings accounts, car and home loans, and even issue credit cards in some cases. To join, often all you need to do is sign up online for a few dollars.


Because credit unions don’t turn a profit, they can return any money they make to their members in the form of higher interest rates on deposits and lower rates on loans. Savings rates are often double what you’ll get at a bank—0.09 percent versus 0.17 percent—according to the National Association of Federally-Insured Credit Unions. You’ll also get a way better deal on car loans, with credit unions charging less than three percent in annual interest on average versus more than four percent at banks. Many credit unions even cut members a dividend check at the end of the year—about $51 per member on average in 2017—more than making up for the small membership fee.

Even better, unlike most banks, credit unions are less likely to charge a monthly fee for a checking account, according to a 2017 Bankrate survey. "Credit unions often pay higher rates on deposit products, charge lower rates on many loan products, have fewer and lower fees, and lower initial deposit requirements than traditional banks,” said Bankrate’s chef financial analyst Greg McBride.

If you’re worried about finding an in-network ATM, don’t be. Credit unions join together so you can use another credit union ATM, branch or network free of charge. You can also withdraw cash for free at retailers like Costco, Dunkin Donuts, and Publix. Some reimburse out-of-network fees as well.

Lastly, credit unions guarantee your deposits up to $250,000, so long as they belong to the National Credit Union Association, the Balance reports.


Here are eight credit unions to consider that anyone can join:

Credit unions with high interest rates on deposits

Alliant Credit Union How to join: Donate $10 to Foster Care for Success Deposit rates: 1.7 percent on savings, .65 percent on checking
Why it’s good: With high interest rates on checking and savings accounts plus 80,000 no-fee, in-network ATMs (and a $20 monthly reimbursement for out-of-network ATMs), Alliant is a solid replacement to a mainstream bank and comes recommended by NerdWallet. And if you’re looking for a home loan, this credit union’s interest rate for a regular 30-year mortgage is a third of a percentage point lower than the national bank average of 4.717 percent.

Connexus Credit Union How to join: Make a $5 donation to the Connexus Association Deposit rates: .25 percent on savings, 1.75 percent on checking
Why it’s good: Another winner in checking account interest rates, Connexus also reimburses up to $25 in ATM fees if you can’t find one of their 54,000 in-network ATMs. If you’re making home repairs this summer, you can nab a home equity line of credit at a rate 4.49, which is close to one and a half percentage points lower than average.

Digital Federal Credit Union How to join: Sign up for Reach out for Schools for $10
Deposit rates: five percent on the first $1,000 in savings, .05 percent on checking
Why it’s good: This credit union has the best savings rates for low balances. Another bonus: Interest on car loans and credit cards are both below the national average. The one downside is that this credit union's ATMs are mostly in the Boston area. However, it reimburses at least $10 a month in out-of-network fees.


Lake Michigan Credit Union How to join: Donate $5 to the ALS Foundation Deposit rates: one percent on savings, three percent on checking account balances up to $15,000
Why it’s good: The high interest rate on checking account balances earned this credit union a top ranking from Money in 2016. It also has a cash back credit card that earns one to three percent on purchases. To get the high-interest checking account rate, you must use direct deposit, pay for purchases with your debit or credit card ten times a month, and log into your online bank account at least four times a month. You also have access to 43,000 in-network ATMs.

Credit unions with low rates on car and home loans

Andrews Federal Credit Union How to join: Become a member of the American Consumer Council for free using promo code “Andrews”
Deposit rates: .31 percent on savings, .20 percent on checking
Why it’s good: Don't join Andrews for the interest rates on deposits. However, if you’re in the market for a car loan, you’ll save big with a low annual interest rate of 1.89 percent—more than two percentage points lower than the average bank rate. You can also get a Visa credit card with an interest rate as low as seven percent versus the national average of 17 percent.

Aspire Federal Credit Union How to join: Sign up for the American Consumer Council for $8
Deposit rates: .01 on savings and checking accounts
Why it’s a good: While the deposit rates at Aspire are rock bottom, you can get a good deal on a home equity loan for 3.75 percent—just under two percentage points lower than the average bank rate. Car loans are lower than the national average as well, and you have access to a large network of more than 70,000 ATMs.

Bethpage Credit Union How to join: Open a savings account for free with as little as a $5 balance Deposit rates: .20 percent for a savings account, one percent for checking
Why it’s good: Recommended by Money, Bethpage offers a 30-year mortgage for 4.375 percent, less than the national average for both banks and credit unions. New car loan rates are also cheaper than average at 2.74 percent. To earn one percent on your checking account, you must use direct deposit and make ten debit card purchases a month. You also get access to 32,000 in-network ATMs.

State Department Federal Credit Union How to join: Sign up for the American Consumer Council for $8
Deposit rates: .10 percent for savings, .40 percent on checking
Why it’s good: You can pay just two percent in annual interest on a new car loan—far below the national average at both banks and credit unions. To get the advertised interest rates on checking accounts you need a balance of $2,000 or higher and direct deposit at least $200 a month. On the plus side, members can access their funds at 30,000 in-network ATMs or 5,000 shared branches.

For more credit unions that anyone can join, check out these lists from Magnify Money and NerdWallet.

Gina Ragusa currently consults for a small community credit union in Massachusetts. She has no financial relationship with any of the credit unions mentioned in this article. Follow Gina on Twitter.