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What Happens When You Open a Credit Union Account?

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So, you need a safe place to deposit your paychecks, such as a savings or checking account. With so many banking options, where do you start? Credit unions are an excellent choice. They typically provide a more personalized banking experience with lower fees and better interest rates.

To get you started, let’s brush up on the requirements to open a credit union account, which is similar to opening a bank account. It’s essential that you understand the available accounts, which ones suit your unique needs, what to expect while applying and the materials and information you’ll need on hand to open the account.

Your Account Options

Credit unions offer member-friendly account options such as the ones described below. Each type provides different features and benefits to suit particular customer needs.

Personal Savings Account - This future-focused account allows you to save money and watch it grow over time. A savings account is a must-have as you plan for your dream home, vacations, retirement and rainy days.

Bonus: You don't have to lift a finger for your money to grow. Each dollar in your savings account earns interest, so the more you deposit, the more interest you will accumulate. Plus, just like FDIC insurance for banks, up to $250,000 is federally insured by the National Credit Union Association if you work with a trusted financial institution.

Regular Checking Account - This is your everyday, easy-access account. Your daily grocery store, gas station or coffee shop transactions are a breeze with a checking account. Access your money securely and quickly with a debit card linked to your account or a physical check.

Bonus: Mobile banking services make paying bills easier than ever. You can check off a task on your to-do list by setting up automatic payments for recurring bills. Or you can deposit checks simply by taking a picture with your smartphone. 

Money Market Account - Sometimes referred to as an MMA, consider these savings accounts with checking account flexibility. Watch your account grow with higher interest rates than a typical savings account. At the same time, you’ll have easy access to your funds.

Bonus: This is the account where you really can have your cake and eat it, too. Personal checks and debit cards are available, just like a regular checking account, as you enjoy the higher interest rate earnings.

These accounts are just the basics. Credit unions offer specialized accounts in each category, such as health savings accounts, club accounts, kids accounts and student checking.

Choose the Right Account

Now that you know the basics, how do you determine which account is right for you? Many people benefit from a combination of accounts, depending on their financial goals. Use this guide to determine which account will fit your lifestyle.

If you’re building a foundation for your family:
Choose a savings account. These are ideal for those looking to save their money for the future. Long-term goals such as college for the kids, a down payment on a new home or supplementing your retirement are excellent reasons to open a savings account.

If you want security combined with convenience:
Choose a checking account. Mobile banking and ATMs make accessing your cash simple and secure. This account is perfect for your daily transactions, with options to use a debit card or a personal check.

If you want flexibility and growth:
Choose a money market account. This account offers higher interest rates than a savings account but allows you to withdraw money easily. Typically, people use their checking accounts for daily transactions and let their money market accounts grow.

Open Your Account

Now that you're ready to open your account, it’s essential for you to understand what you need to do. First, have the following materials and information on hand:
  • A valid driver’s license or state-issued ID and a secondary form of identification
  • Your contact information including home address, email and phone number
  • Your previous home address (if you have lived at your current home address for less than two years)
  • Your Social Security number
  • For the first deposit, a debit card, credit card or U.S. savings or checking account
  • The minimum deposit amount for the type of account you’re opening
Important note: If you’re opening a joint account, you’ll need that same information for your partner.

Now that you know the requirements to open a credit union account, it’s time to apply. Many institutions like Power Financial Credit Union offer you the ease of applying quickly and securely online. You can also visit a branch location or open an account over the phone. No matter how you open the account, you’ll need the documentation and information discussed above (forms of identification, Social Security number, etc.).

Remember, to open an account at a credit union, you'll need to become a member. Membership eligibility often depends on where you live, work or go to school. For example, at Power Financial Credit Union, you are eligible to join if you live, work or go to school in one of the 13 counties in Florida they serve or work for one of their select employee groups. If you are related to an existing member, you are also able to join.

Does it Hurt Your Credit Score When You Open an Account?

When you open an account, regardless of if it’s at a bank or credit union, the institution will do some level of check on you. Some institutions will do a credit check, also known as a hard inquiry, while others won’t. At Power Financial Credit Union, we do a hard credit pull when you become a member. The reason is to reduce the occurrences of fraud.

Don’t worry though, a hard credit pull won’t impact your credit score that much or for too long. According to FICO, a hard inquiry will decrease your credit score five points or less. If you have a strong credit history and no other credit issues, your scores may drop even less. Plus, the drop is temporary. Your scores will bounce back, usually within a few months, if everything else in your credit history remains positive.

Financial institutions will also check to verify your identity and screen your banking history using a reporting agency which pulls your checking and savings account history. The reason is to see if you have a history of overdrafts, bounced checks, fraud, negative balances or other negative items in your banking history. 

Ready to Get Started?

Now you know the types of accounts and what you need to become a member. If you still have questions about your account options or how to switch from your bank, please contact Power Financial Credit Union today. With almost 35,000 members and over 70 years of experience, we can find the perfect solution to match your personal finance needs.