5 Myths About Credit Unions
Credit unions are cooperative, not-for-profit financial institutions. Unlike banks, credit unions prioritize people over profits and, in kind, are member-owned. The credit union philosophy is “people helping people,” which drives the mission and vision for their memberships, employees, and communities. Credit unions provide a safe, accessible, and value-driven alternative to traditional banking. Let’s clear up some of the myths about credit unions:
Credit unions don’t have as many services as a bank
Myth. Most credit unions offer the same accounts, loans, and services as banks. From checking accounts and investment certificates to mortgages and recreational vehicle loans, credit unions have a wide variety of products, often offering higher dividends and lower loan rates. Most also include services like credit monitoring, budgeting tools, and free financial coaching. In short, credit unions provide the same financial products as banks—often with added value, better rates, and personalized member support.
It’s harder to access your money at a credit union
Myth. With fewer locations than the traditional banks, many people believe that accessing their money at a credit union is more difficult. This is where the power of the cooperative comes in. Most credit unions participate in “shared branching.” With this concept, you can access your funds either through another credit union’s ATM network or in their lobbies. Thanks to shared branching, credit union members enjoy convenient access to their funds nationwide, proving that fewer locations don’t mean less accessibility.
Credit union deposits aren’t insured
Myth. Credit union deposits are insured by the National Credit Union Administration. This is a government entity that protects credit union funds the same way as the FDIC. The protection that you get from both entities is identical in function and has the same limits, insuring your money up to $250,000 per owner and per ownership category if a bank or credit union should fail. So, whether your money is in a bank or a credit union, you can feel equally confident that it’s protected up to the same federal limits.
It’s hard to open an account with a credit union
Myth. While credit unions do require certain eligibility criteria to open a membership, you may find it easier to join than you think. From living in or attending school in a certain county to having a family member belonging to that credit union, there are many different options to meet the criteria. Plus, with the shared branching ability mentioned above, you can also access your funds more easily if your chosen credit union is in the network. With so many paths to membership and convenient access through shared branching, joining a credit union is more accessible than it may initially seem.
Credit unions don’t pay taxes
Myth. Because of the not-for-profit, cooperative structures that provide affordable financial solutions, credit unions do not pay federal income tax. This is the only tax a credit union does not pay and it’s because taxes are returned to members in numerous ways, including lower loan rates and higher deposit rates. Credit unions still pay payroll, property, sales, and state and local taxes. This unique tax structure allows credit unions to reinvest more in their members and communities, reinforcing their mission to serve rather than profit.
Credit unions are built to serve, not to profit. Common myths that surround them often stem from outdated perceptions, but the truth is that credit unions offer modern banking solutions with a personal touch. With competitive products, strong federal protections, convenient access, and a commitment to giving back, credit unions continue to be a smart, community-focused choice for millions of people. If you’re looking for a financial institution that puts your best interests first, a credit union might be exactly what you’ve been looking for.
By Rachel Caballero | TruWest Credit Union
