Because a growing number of Americans are disillusioned with their banks, which have been regularly increasing their consumer fees, credit unions are reaping the benefits.
In June, credit unions surpassed 100 million members nationwide, an increase of more than 16 percent from 10 years ago, according to the Credit Union National Association. In the past year alone, they've added 2.85 million members.
Many of these new members have left their banks in the years since the financial crisis.
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"People are still feeling bruised from the downturn," Mike Schenk, chief economist at CUNA, told The Fiscal Times. "Credit unions didn't engage in the type of [subprime] lending that led to the financial crisis."
Consumers are increasingly realizing the numerous benefits of the smaller, often more personal credit unions over banks. In 2013, trust in credit unions, as measured by the Chicago Booth Kellogg School Financial Trust Index, was at 62 percent, while trust in national banks was at 28 percent.
For many Americans, though, credit unions still seem to be a secret society of sorts.
There are roughly 7,000 credit unions in the U.S., all not-for-profit financial cooperatives owned and controlled by members, which means they don't issue stocks or pay dividends to stockholders. Each member typically gets a vote, no matter how much money is in that individual's checking account.
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Any profit is returned to members in the form of lower loan rates, higher savings rates, and lower fees. For instance, nearly three-quarters of the nation's credit unions offer standalone free checking accounts, which are available at only 38 percent of large banks.
One of the main worries of potential credit union customers is that there aren't as many branches and ATMs available compared with large national banks. But more than 5,000 locations now participate in a shared-branch network, where credit union customers can bank (without added fees) at other branches throughout the country.
The same thing goes for ATMs. There are nearly 30,000 surcharge-free ATMs nationwide that credit union customers can use and find through the smartphone app, ATM Locator by Co-op Financial Services.
Just like with any bank, consumers' money is insured — by the National Credit Union Administration instead of by the Federal Deposit Insurance Corp.
To be sure, credit unions may seem too good to be true — and there are some limitations to keep in mind. While joining credit unions has become easier and looser than in the past when they were limited strictly to specific groups of customers — to those with either a religious, industry, or company affiliation, for example — many still have specific rules and membership requirements.
To find the closest credit union near you, click here. You'll also see the membership requirements of each credit union or a number to call for more information.
