How to Switch From a Bank to a Credit Union

5 MIN. READ

Credit union memberships have recently reached 136.6 million as more people realize that the member-first, community-focused approach better suits their financial needs, especially in uncertain times. In addition, better rates and lower fees are just two money-smart reasons to consider breaking up with your bank.

Thinking of making the switch from a big bank to your local credit union? Here's a practical guide on how to switch to a credit union.

Why make the switch?

You've likely heard the old saying that people reveal their true colors in times of crisis. This is also true for financial institutions, and credit unions proved to be the superior choice during the pandemic.

Now, as consumers and businesses continue to face economic uncertainty, adopting sound financial goals is more important than ever. By choosing a credit union over a traditional bank, you’re putting your trust in an institution that always puts you and your family first, helps you plan for the future, and guides you through periods of economic uncertainty.

Data reveals that switching to a credit union translates into tangible benefits, as credit unions offer significantly more affordable rates on several products compared to traditional banks. You can expect higher CD rates, lower credit card rates, as well as lower rates on fixed and variable mortgage products. New and used car loans also tend to be more affordable with credit unions.

With a heart for Main Street instead of Wall Street, credit unions also provide better customer service, which is especially appreciated during more significant financial transactions, such as applying for a mortgage or loan.

Here are just a few other perks that come with choosing a credit union:
 

• Personalized, fast customer service
• A community focus
• Better rates on loans
• Higher interest rates on savings accounts and CDs
• No unnecessary and costly fees
• As a member, you are a part owner of the credit union

Just like the Federal Deposit Insurance Corporation (FDIC) insures accounts at a bank, the National Credit Union Association (NCUA) insures accounts up to $250,000 at credit unions. This covers your checking accounts, savings accounts, CDs, and money market accounts, as well as traditional and Roth IRAs. Like large banks, many credit unions offer secure and convenient mobile banking, making budgeting a breeze. Keep in mind that not all banks and credit unions are insured by the FDIC or NCUA. For peace of mind, make sure your new credit union is insured by the NCUA.

Because credit unions are hyper-local, they tend to have a smaller geographic footprint when compared to large banks, and as a result, they might have fewer ATMs available. However, many credit unions offer access to other financial institutions' ATMs or fee reimbursements. This allows you the benefits of being part of a community with the convenience of accessing your money in multiple locations.

Traditional banks often appeal to consumers with convenient online and mobile experiences. However, credit unions have been catching up and now offer comparable experiences in terms of convenience. In fact, 76% of member interactions now happen online, and you can access online banking, automated features, convenient online applications, and more.

The range of services offered is also comparable to what you can expect from a major financial institution. Here are some of the products credit unions provide:
 

• Checking and saving accounts
• Credit cards
• CDs and money market accounts
• Mortgages
• Auto loans
• Personal loans
• IRAs
• Student loans
• Business banking products

Survey data also shows that credit union members are financially healthier than those who bank elsewhere. When it comes to spending, 90% say their credit union makes it easier for them to manage their finances, while 86% say their credit union membership makes getting loans easier. Credit union members benefit while trying to save money, too; they are more likely to have emergency funds available when the need arises.

Credit unions empower their members to make informed financial decisions by offering experiences that promote financial literacy. You can work with a credit union representative to create a personalized financial plan and receive guidance. If you have a question about a product or financial decision, a representative is always a phone call or a branch visit away.

It's no surprise that membership numbers are up for credit unions. Between Q2 2022 and Q2 2023, total shares and deposits increased by 1.2% as more consumers decided to switch. Credit unions' perks make the decision to join one simple; however, you're likely wondering how to switch your bank to a credit union. The process is easier than you might imagine.

Am I Eligible?

Credit unions are not-for-profit cooperative organizations, and their membership eligibility requirements might include specific employers, a geographic area, or specialized groups, such as churches or universities. This commonality means the community's and its members' goals, interests, and needs are always front and center.

As a business owner, banking with a credit union will give you access to affordable products while helping you thrive and connect with your community.

Furthermore, when you become a credit union member, you are not only a member but a part-owner. So, your voice matters, and members elect a volunteer board of directors to help manage the credit union's direction. Also, because credit unions are not-for-profit, all profits are returned to the members through reduced fees and lower loan rates.

How to Switch From a Bank to a Credit Union?

Now that you've decided a credit union is right for you, it's time to implement your plan. Knowing how to switch your bank account to a credit union account is easier than you might think.
 

1. Open your account: Opening an account is like opening one at a bank. You can do this online, over the phone, or by visiting your nearest branch.
2. Make your initial deposit: To become a credit union member, you must make a small deposit. This is the purchase of your share in the credit union. It varies by credit union but typically ranges from $5 to 25.
3. Check on your automatic payments: Any bills you have auto-deducted from your bank accounts must be switched over to your new credit union account.
4. Update your direct deposit information: Your paycheck will be deposited in your new account, facilitating bill payments and other financial transactions.
5. Close your old accounts: Once you've timed your auto-payments correctly, it's time to close them.
6. Consider how additional products fit into your financial plan: A credit union representative can discuss lending or investment options.

With any financial account, you must provide the following information to open an account:
 

• Social Security Number
• Your Current Address
• Valid ID (driver's license, passport, etc.)

Remember, if you have any questions about eligibility or how to switch to a credit union account, you can ask! Friendly, personalized customer service is a perk of being a credit union member, and help is only a phone call (or Live Online Chat) away.

Count on us

Switching from a bank to a credit union can save you money and give you peace of mind knowing you have a trustworthy banking partner that puts your interests above those of outside shareholders. Power Financial Credit Union serves nearly 35,000 South Florida members. With over 72 years of experience, we know how to provide direct, helpful services that are tailor-made for your unique situation. Contact us today to learn how we can help you achieve your financial goals.