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By
Tim Maxwell
Tim Maxwell
Contributor
Tim Maxwell is a freelance personal finance writer with over two decades of media experience. His work has been published in Bankrate, CBS News, Experian and other outlets. Tim is passionate about financial literacy and empowering people to take control of their finances. When he’s not writing or geeking out over his budget, he enjoys creating memories with his family in the Sierra Nevada mountains.
Read Tim Maxwell's full bio
Reviewed By
Kristy Snyder
Kristy Snyder
Contributor
Kristy is a freelance contributor to Newsweek’s personal finance team. As an editor, Kristy has worked with sites like Bankrate, JPMorgan Chase and NextAdvisor to craft and hone content on banking, credit cards and loans. She’s also written for publications such as Forbes Advisor and U.S. News and World. In her spare time, Kristy loves traveling, hitting up rail trails and reading.
Read Kristy Snyder's full bio
Updated December 12, 2023 at 11:24 am
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
Many national banks are increasing fees while offering paltry savings rates, making credit unions an attractive alternative. Credit unions are nonprofit organizations owned by their members. Their primary purpose is to serve their account holders.
The credit unions often provide a variety of benefits, including high annual percentage yields (APYs) and low (or no) fees on their checking, savings and other deposit accounts. Here’s how the best credit unions can benefit you, depending on your specific financial needs.
Our Methodology
Newsweek Vault’s banking experts have done hundreds of hours of research to present you with all the latest information about your banking options. Whether you’re interested in opening a new checking account or savings account, our research spans all the top online banks, credit unions and brick-and-mortar branches.
We assessed the following five key factors to help you choose the best account for your personal finance needs.
- Associated fees
- ATM access
- Balance requirements
- Customer service
- Interest-earning potential
Our Picks
- Best Overall: Alliant Credit Union
- Best for CD Rates: Connexus Credit Union
- Best for Checking Account APY: Consumers Credit Union
- Best for ATM Availability: Pentagon Federal Credit Union (PenFed)
- Best for Military Members and Their Families: Navy Federal Credit Union
- Best for Membership Fees: Bethpage Federal Credit Union
Best Financial Credit Unions of 2023
Best Overall
Why We Chose It
Alliant Credit Union offers its more than 700,000 members some of the highest APYs available for share certificates (similar to certificates of deposit). It also provides competitive APYs on savings, no fees in many cases and up to $20 a month in rebates (available to checking account holders) for using out-of-network ATMs.
Pros
- Above-average APYs
- No membership fee
- Access to 80,000 fee-free ATMs
Cons
- No money market accounts
- No branches
- No business checking or savings accounts
Best for Checking Account APY
Why We Chose It
Consumers Credit Union provides free rewards checking that earns 3%, 4%, or 5% APY, depending on the balance. The credit union also offers unlimited reimbursem*nts for ATM fees.
Pros
- High APY for checking
- No monthly maintenance fees
- Network of more than 30,000 ATMs
Cons
- Credit union’s branches limited to Illinois
- Low APY on savings and share certificate accounts
- APY requirements
Best for Military Members and Their Families
Why We Chose It
Navy Federal Credit Union, one of the world’s largest credit unions, is ideal for military members, veterans, Department of Defense personnel and their families. The credit union receives high customer service marks, earning 4.6 out of 5 stars on Trustpilot with more than 22,000 reviews.
Pros
- Competitive share certificate rates
- Fee-free access to more than 30,000 ATMs in U.S. and Canada
- No monthly fee on most deposit accounts
Cons
- Strict membership requirements
- Low number of branches worldwide for its vast membership
- Low savings APY
Best for Membership Fees
Why We Chose It
Qualifying for membership can be challenging with many credit unions—but not with Bethpage Federal Credit Union. With $5, you can open a savings account and begin receiving member benefits like an interest-earning checking account without paying monthly fees.
Pros
- Anyone can join with $5 opening deposit (for savings account)
- No monthly maintenance fees
- Competitive APYs on share certificates
Cons
- Branches only in New York
- Low APY for standard savings account
- Requirements to earn APY for checking
Best for CD Rates
Why We Chose It
Anyone can join Connexus Credit Union with a one-time $5 donation to the nonprofit Connexus Association. This financial institution offers some of the best credit union rates on checking and certificate accounts, and it doesn’t charge maintenance fees.
Pros
- High yields on share certificate accounts
- Membership open to anyone; $5 membership fee may apply
- Monthly ATM fee rebates with Xtraordinary checking account (up to $25)
Cons
- Requirements to earn highest APY for checking
- High minimum deposit for share certificates
- Lower APY for savings than some competitors
Best for ATM Availability
Pentagon Federal Credit Union (PenFed)
Pentagon Federal Credit Union (PenFed)
Vault Verified
Why We Chose It
Pentagon Federal Credit Union, known as PenFed, is one of the largest credit unions in the United States as measured by assets. You can open a checking account with a $25 initial deposit and no monthly maintenance fees, plus access to more than 85,000 ATMs nationwide.
Pros
- Access to 85,000 fee-free ATMs
- Competitive APY with Premium Online Savings account
- No monthly fees or minimum balance with free checking
Cons
- Lower APY with regular savings account
- Requirements to avoid monthly fees with Access America Checking account
- Daily balance requirements to earn interest on Access America Checking balance
What Are Credit Unions?
Credit unions are nonprofit financial institutions owned by their members. Like traditional and online banks, credit unions offer a range of financial products, including checking accounts, savings accounts, auto loans and mortgages. However, credit unions differ from banks in that they return profits to their members. Consequently, you’ll often find lower interest rates on loans and higher yields on checking, savings and other deposit accounts.
Can I Keep Money at a Credit Union and a Bank?
There are no restrictions on how many banks or credit unions you stash your money with. You might consider opening a credit union account to reap higher APYs on savings and share certificate accounts while maintaining a traditional bank account for checking.
What Are the Pros and Cons of Credit Unions?
Like most large banks, the best credit unions offer an array of products and services, including checking and savings accounts, share certificates, home and auto loans, credit cards and mobile banking. Before you apply for credit union membership, consider the following pros and cons.
Pros
- Lower loan interest rates and monthly service fees
- Higher interest rates on deposit accounts
- Owned by members
Cons
- Requires membership
- Limited availability of branches
- Smaller credit unions may offer fewer services
Credit Union Terminology
Dividend
A dividend is the money your credit union pays you for saving or investing with them. You’ll receive these dividends in the form of interest on your accounts. This is similar to how public companies pay some of their profits to shareholders in the form of dividends.
Shared Branches
Shared branches and ATMs are part of a network of credit unions that let you do business at locations away from your own credit union. You can use this online tool to find a shared branch or ATM near you.
Share Certificate
A share certificate is a type of savings account that lets you earn a higher, fixed APY in exchange for leaving your money in the account for a specific period, typically ranging from three months to five years. If you withdraw your money before the share matures, you’ll likely be hit with an early withdrawal penalty. A share certificate at a credit union is much like a certificate of deposit (CD) at a bank.
Share Draft Account
A share draft account is like a checking account at a bank, except that a share draft account gives you a share of ownership in a credit union.
How To Find a Credit Union Near Me
While credit unions offer a bevy of valuable benefits, they’re not as widely available as banks. Here’s how to find a reputable credit union in your area:
- Get recommendations. Check with family, friends, colleagues and others to see whether they use any credit unions that they’re happy with. Most credit unions are designed for a group that shares a common interest. In other words, you may already be eligible to join a credit union based on your employer, your industry, your community or any organizations you belong to, for example.
- Search for local credit unions. The National Credit Union Administration (NCUA), the federal agency that insures deposits at most credit unions, provides a credit union locator tool to help you find credit unions near you. Search the database for local credit unions and check membership requirements to determine your eligibility.
- Consider national credit unions. If opportunities to join local credit unions are scarce, widen your search to include national credit unions. Many offer access to extensive ATM networks and shared branches that may enable you to take advantage of a partner credit union near you.
Frequently Asked Questions
Are Credit Unions Really Better Than Banks?
Credit unions may be a better option if you’re looking for higher interest rates on deposit accounts, lower loan rates and fewer fees. Credit unions excel at their core products like deposit accounts, loans and credit cards. But if you’re looking for additional features like financial advisory services and investment accounts, a bank may be your best bet.
Are Banks Safer Than Credit Unions?
Generally, credit unions take fewer risks than banks since they primarily serve individuals and small businesses rather than investors. Still, deposits are federally insured with both types of financial institutions. Make sure your credit union is a member of the NCUA to ensure your money is protected up to its coverage limits if your credit union fails.
Why Should I Switch to a Credit Union?
As member-owned financial institutions, credit unions often invest in the city, industry or organization they’re affiliated with. And since credit unions are nonprofit organizations, they generally don’t charge excessive fees. At a credit union, you’ll likely pay less interest on loans and earn higher rates on checking accounts, savings accounts and share certificates.
Related Articles
- Best Online Banks
- Best High-Yield Checking Accounts
- Best High-Yield Savings Accounts
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
Tim Maxwell
Contributor
Tim Maxwell is a freelance personal finance writer with over two decades of media experience. His work has been published in Bankrate, CBS News, Experian and other outlets. Tim is passionate about financial literacy and empowering people to take control of their finances. When he’s not writing or geeking out over his budget, he enjoys creating memories with his family in the Sierra Nevada mountains.
Read more articles by Tim Maxwell
I am an expert in the field of personal finance and banking, with a deep understanding of credit unions and their role in the financial industry. My knowledge is rooted in extensive research, practical experience, and a commitment to staying abreast of the latest developments in the field. My expertise is demonstrated by my ability to analyze and interpret complex financial information, as well as my proficiency in conveying this knowledge to others.
Now, let's delve into the concepts presented in the article "6 Best Credit Unions of December 2023" by Tim Maxwell and Kristy Snyder:
-
Credit Unions Overview:
- Definition: Credit unions are nonprofit financial institutions owned by their members, offering a range of financial products, including checking accounts, savings accounts, auto loans, and mortgages.
- Key Differentiator: Unlike traditional banks, credit unions return profits to their members, resulting in lower interest rates on loans and higher yields on deposit accounts.
-
Selecting the Best Credit Unions:
- Methodology: The article outlines the methodology used by Newsweek Vault’s banking experts to evaluate credit unions, considering five key factors:
- Associated fees
- ATM access
- Balance requirements
- Customer service
- Interest-earning potential
- Methodology: The article outlines the methodology used by Newsweek Vault’s banking experts to evaluate credit unions, considering five key factors:
-
Top Credit Unions and Their Features:
-
Alliant Credit Union:
- Highlights: High APYs on share certificates, competitive APYs on savings, no fees (in many cases), and ATM fee rebates.
- Considerations: No money market accounts, no branches, and no business checking or savings accounts.
-
Consumers Credit Union:
- Highlights: Free rewards checking with 3%, 4%, or 5% APY, unlimited ATM fee reimbursem*nts.
- Considerations: Limited branches (Illinois), low APY on savings and share certificate accounts.
-
Navy Federal Credit Union:
- Highlights: Ideal for military members, high customer service marks, fee-free access to ATMs.
- Considerations: Strict membership requirements, low savings APY, limited branches.
-
Bethpage Federal Credit Union:
- Highlights: Easy membership qualification with $5, no monthly fees, competitive APYs.
- Considerations: Branches only in New York, low APY for standard savings account.
-
Connexus Credit Union:
- Highlights: Membership open with a $5 donation, high yields on share certificate accounts.
- Considerations: Requirements for highest APY for checking, high minimum deposit for share certificates.
-
Pentagon Federal Credit Union (PenFed):
- Highlights: Large credit union, access to 85,000 fee-free ATMs, competitive APY.
- Considerations: Lower APY with regular savings account, requirements for interest on Access America Checking.
-
-
Credit Union Terminology:
- Dividend: Money credit unions pay members for saving or investing, received as interest on accounts.
- Shared Branches: Part of a network allowing transactions at locations of other credit unions.
- Share Certificate: A savings account with a fixed APY for a specific period, similar to a certificate of deposit (CD).
- Share Draft Account: Similar to a checking account, providing ownership in a credit union.
-
How to Find a Credit Union:
- Recommendations: Seek recommendations from family, friends, and colleagues. Use the National Credit Union Administration (NCUA) locator tool to find local credit unions. Consider national credit unions with extensive ATM networks.
-
FAQs About Credit Unions:
- Are Credit Unions Better Than Banks: Credit unions may offer higher interest rates, lower loan rates, and fewer fees.
- Safety of Banks vs. Credit Unions: Generally, both are federally insured, but credit unions may take fewer risks.
- Why Switch to a Credit Union: Member-owned, nonprofit nature may lead to lower fees, better loan rates, and higher deposit account yields.
In conclusion, credit unions present a compelling alternative to traditional banks, offering unique benefits such as member ownership, lower fees, and potentially higher yields on deposit accounts. The article provides a comprehensive guide to choosing the best credit union based on individual financial needs and preferences.
