Are you ready to open a new checking or savings account, or are you preparing to switch banks? If so, you may be wondering about your options.
One of the most common questions we hear at Addition Financial is:
“What does a credit union do?”
It’s an important question to ask. You shouldn’t entrust your money to any financial institution before you understand what they do. And just as important is understanding how to join a credit union. Let’s talk about the answers to both questions.
What Does a Credit Union Do?
A credit union does many of the same things that a bank does. That means that they:
- Operate and administer checking and savings accounts on behalf of their members
- Evaluate personal credit and issue credit cards
- Loan money to members to buy homes and cars
- Help members plan for retirement
Those are all things that banks do, too. Banks and credit unions have a lot in common. However, there are some key differences. For example:
- Credit unions are often willing to work with members who have not yet established credit or who have troubled credit histories, while banks are not.
- Credit unions provide significant financial guidance to every member, from kids and teenagers opening their first accounts to large companies who prefer to work with a credit union. The guidance may include written materials (blogs and guides), as well as online calculators and in-person financial advice.
- Credit unions operate with the best interest of their members in mind. They’re not-for-profit organizations, and often provide a higher level of service and lower rates than traditional banks.
Credit unions are often more active in the communities where they’re located than banks are. Some credit unions serve a specific population – for example, people who live in a prescribed geographical area or members of a profession. Addition Financial first got its start back in 1937 as a credit union for teachers in Orange County.
You should also know that as not-for-profit organizations, credit unions are exempt from paying federal and state taxes. As a result, they often offer lower interest rates and fees than banks do. Any profits they earn are either reinvested in the credit union or distributed to members as dividends.
How Do I Join a Credit Union?
Another question we hear frequently is about how to join a credit union. When you walk into a bank, you only need to present documentation proving that you are who you say you are and meet the bank’s minimum deposit requirement for the account.
Applying to join a credit union is a little different. First, you must make sure you qualify to join the credit union. You can do that by checking its charter, which should be available on the credit union’s website. For example, Addition Financial’s charter says:
“Anyone who lives, works, worships, volunteers, attends school or vocational training, or is an alumni of any college, university, or educational institution located in Orange, Osceola, Seminole, Lake, Alachua, Brevard, Duval, Flagler, Hernando, Highlands, Hillsborough, Indian River, Marion, Martin, Okeechobee, Pasco, Pinellas, Polk, St. Johns, St. Lucie, Sumter or Volusia County may join. If you become a member of Addition Financial, your immediate family members are automatically eligible to join.”
If you meet these requirements or you have a family member who is already a member, you are eligible for membership. After that, you’ll simply need to fill out an application and provide some basic documentation. Here’s what you’ll need:
- A photo ID. Acceptable forms include a driver’s license, military ID, US passport, permanent residency card or a state-issued ID.
- Your Social Security number
- A minimum deposit (at Addition Financial, you need only $5 to open a Share Savings account)
- A membership fee (we charge only $10)
You should be aware that if the address on your ID doesn’t match your current residence, you’ll need an additional ID that shows your address. You may use:
- A current utility bill (within 30 days)
- Current vehicle registration
- Current lease or rental agreement
- Current mortgage document/coupons
- Current voter registration card
- Bank statement (within 30 days)
- Paystub (within 30 days)
- Official mail (IRS, credit card bill, home/auto insurance or court documents)
Once your application is approved and you’ve fulfilled all requirements, you’ll be a credit union member. That means you’ll have access to all the features, services and rewards of being a member-owner instead of a faceless customer.
Joining a credit union is quick and easy provided you meet the membership requirements. Now that you know what credit unions do and how to join, we hope you’ll consider joining the Addition Financial family.
Click here to learn more about our checking accounts, and here for our savings accounts.