Credit Unions

A credit union is a non-profit financial cooperative (and therefore exempt from federal and local taxes) that offers many of the same services as a bank, such as savings accounts (called share accounts), checking accounts (called share draft accounts), and CDs (called share term certificates), loans and online banking. Federally chartered credit unions can also write residential mortgages and issue credit cards. Because they don't have to pay taxes, credit unions can charge below-market rates on loans and also pay higher rates to their account holders.

Over 10,000 credit unions currently serve more than 79 million people in the U.S., and of all types of financial institutions, they consistently rank #1 in customer satisfaction. The vast majority of these credit unions are federally chartered and therefore regulated by an independent federal agency, the National Credit Union Administration (NCUA). In fact, there are currently fewer than 500 non-federally insured (state chartered) credit unions. To be safest, make sure yours is not one of them.

How they work
In order to participate in a credit union, you must be a member; all credit unions have their own requirements for membership. Typically, they are organized to serve people in a particular community, employees of one or more companies or industries, or members of an organization or association, and only those people are eligible for membership. Sometimes relatives of members are also eligible to become members, even if they do not meet the requirements.

Credit unions are democratically run and owned by their members, which is why they are allowed to be non-profits. Members pool their funds to make loans to one another. The volunteer board that runs each credit union is elected by the members.

Finding a credit union
The best site I've found for searching credit unions is the painfully obvious FindACreditUnion.com (run by the Credit Union League) because it lets you search by location, affiliation, ethnicity, and other common membership qualifiers.

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