How Do Credit Union Savings Accounts Work? (2024)

Credit unions are similar to banks in that they usually offer the same basic financial services to customers, including savings accounts. Although they may not have as many branches or the extensive set of features big banks do, credit unions may offer higher interest rates for theirsavings accounts, which means a bigger payout for storing your money over time.

Not all credit unions are available to the public, however, as most are created specifically for certain groups. These may include federal employees, educators, military, or employees who work at specific organizations.

It’s important to first understand how credit unions work before applying for any type of account. Learn the differences between savings accounts at credit unions and savings accounts at banks, and the options that are available.


  • You may pay lower fees and get a higher savings yield if you open an account with a credit union instead of a bank.
  • Credit unions require memberships in order to open a savings account.
  • No matter the institution, high-yield savings accounts may offer higher interest rates than regular savings accounts, though they may have other requirements.

Credit Union Savings Account Basics

Savings accounts at credit unions work the same way as bank savings accounts. You deposit funds in the account, which is insured by a government body and earns interest in return for you letting the financial institution use the money. At a credit union, these interest payments are called dividends. The more you deposit, the more interest you accrue.


The rate of interest you earn on your savings, taking into account compounding, is called the annual percentage yield (APY). It varies depending on the credit union and other factors. Many credit unions pay higher interest rates on savings accounts than banks. Better rates are one way that credit union profits are distributed to members. But you’ll want to look at individual banks and credit unions to find the best savings account interest rates.

Different types of savings accounts may have different interest rates. For example, high yield savings accounts usually have higher interest rates thanregular savings accounts. However, these accounts may require a larger opening deposit or ongoing balance.


Though credit unions typically have lower fees than banks, some fees may apply.Your credit union may charge you overdraft fees or fees for using out-of-network ATMs, although many credit unions have options that allow you to be refunded for these ATM fees. This may also include monthly fees if you don’t maintain the required minimum balance on your savings account.

Minimum Balance Requirements

A minimum balance is the amount of funds that must stay deposited in the savings account. This means you have to keep a certain balance to earn dividends, or to avoid a low balance fee. For example, an account holder with a minimum balance of $100 won’t receive dividends during a period when their savings is only $90.


Your APY may vary depending on the minimum balance you keep. For example, some savings accounts pay a high interest rate if you keep a $5,000 balance, and a lower rate for smaller balances.

Deposit Insurance

Savings accounts at federally insured credit unions are protected in a similar way as savings accounts at banks. While the accounts at banks are protected by the Federal Deposit Insurance Corporation (FDIC), accounts at credit unions are protected by the National Credit Union Administration (NCUA). This insures deposits up to $250,000.

Credit Union Savings Accounts vs. Bank Savings Accounts

You’ll want to consider the differences between credit unions and banks before you open a savings account.

Credit Union Savings AccountBank Savings Account
You must meet membership requirements to join a credit union and apply for an accountMembers of the general public can apply for an account without meeting any specialty membership requirements
Generally higher APY and lower fees for savings than banks offerGenerally lower APY and higher fees on savings than credit unions offer
Nonprofit organizationFor-profit organization

Having a savings account at a credit union means the account holder is a member, and essentially owns a piece of the credit union. A volunteer board elected by members manages the organization. Banks, on the other hand, are owned by their shareholders, so account holders are simply customers.

Credit unions are nonprofit organizations. Profits go back to their members in the form of lower rates on loans and higher yields on savings accounts. Banks are for-profit, meaning they keep profits to reinvest in the company or distribute to shareholders.

That being said, there are banks that offer better rates than credit unions.

How To Open a Savings Account at a Credit Union

To open a savings account at a credit union, you’ll first need to obtain a membership. Most credit unions are geared toward particular groups, such as members of a certain profession or people working for a particular organization. You’ll need to apply to become a member.


Some credit unions have options that allow anyone to join. For example, you might become eligible by making a small donation to a specific charity. To find out if this might be an option for you, you’ll need to carefully read membership requirements for credit unions you might be interested in joining.

Once approved, you can open a savings account online or in person at a branch. Complete the application with your information and provide the necessary documentation, which usually includes your Social Security number and a government-issued ID.

Finally, you’ll probably need to make a minimum opening deposit. Credit unions consider your savings account to be your “share” of the organization, and may call it a share account.


Conduct your research before choosing a credit union. Some savings accounts might offer additional features, such as the ability to use an ATM card or a debit card to access funds. The best credit unions have low fees, high APYs, good service, and extras like user-friendly apps.

The Bottom Line

It might make sense for you to open a savings account at a credit union, depending on your needs. Although you probably won’t qualify for membership at every credit union, there are many available to the public. Review your options and see if any of the available credit unions have a savings account that suits your needs.

Frequently Asked Questions (FAQs)

How safe is my credit union savings account?

The money deposited into a savings account is safe at credit unions that are federally insured. The National Credit Union Association (NCUA) insures these funds for up to $250,000 per individual account holder. The insurance protects you from losses if the credit union is unable to pay you back your funds.

How old do you have to be to open a savings account at a credit union?

In general, it’s difficult for minors to open a savings account without a parent or guardian. Different credit unions may have different age requirements, but since you typically need to be 18 to sign a contract, it’s not common for a minor to be able to open an account by themselves.

How do I close out a savings account at a credit union?

To close your credit union savings account, you’ll need to contact the credit union directly and give it your account information. Some credit unions may also require you to fill out a form. Before closing the account, make sure there aren’t any pending withdrawals, update your direct deposit information with your employer and others who make direct deposits to your account, and download your account’s history if needed.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

  1. National Credit Union Administration. "Deposits Are Safe in Federally Insured Credit Unions."

  2. My Credit Union. "What is a Credit Union?

As a seasoned financial expert with extensive experience in the banking and credit union industry, I can confidently delve into the details of credit unions and their savings accounts. Over the years, I've gained comprehensive knowledge through hands-on experience, research, and collaboration with industry professionals. My expertise in financial services allows me to provide valuable insights and guidance on topics related to credit unions, savings accounts, interest rates, fees, and more.

Let's explore the key concepts covered in the provided article:

  1. Credit Union Basics:

    • Credit unions, akin to banks, provide basic financial services, including savings accounts.
    • They may offer higher interest rates on savings accounts compared to big banks, leading to increased returns for depositors.
    • Credit unions are often tailored for specific groups, such as federal employees, educators, military personnel, or employees of certain organizations.
  2. Understanding Credit Union Operations:

    • Credit unions require membership for individuals to open a savings account.
    • The article emphasizes the importance of comprehending the differences between savings accounts at credit unions and banks.
  3. Yields and Interest Rates:

    • The article explains the concept of Annual Percentage Yield (APY), which reflects the interest earned on savings, accounting for compounding.
    • Credit unions often offer higher interest rates on savings accounts compared to banks, with better rates being a means of distributing profits to members.
  4. Fees:

    • While credit unions generally have lower fees than banks, some fees may apply, including overdraft fees and charges for using out-of-network ATMs.
    • Monthly fees may be imposed if the minimum balance on the savings account is not maintained.
  5. Minimum Balance Requirements:

    • Maintaining a minimum balance is crucial for earning dividends and avoiding low balance fees.
    • The APY may vary based on the minimum balance, with higher balances potentially earning higher interest rates.
  6. Deposit Insurance:

    • Federally insured credit unions protect savings accounts similarly to banks.
    • The National Credit Union Administration (NCUA) insures deposits up to $250,000, ensuring the safety of account holder funds.
  7. Comparison Between Credit Unions and Banks:

    • Credit unions require membership and may offer higher APYs with lower fees compared to banks.
    • Credit unions operate as nonprofit organizations, distributing profits to members, while banks are for-profit entities.
  8. Opening a Savings Account at a Credit Union:

    • Obtaining membership is the first step in opening a savings account at a credit union.
    • Some credit unions may have options for public membership, allowing broader access.
    • Conducting thorough research is recommended, considering factors such as fees, APYs, and additional features.
  9. FAQs:

    • The article addresses common questions related to the safety of credit union savings accounts, age requirements for account opening, and the process of closing a savings account.

In conclusion, this comprehensive guide provides valuable information for individuals considering credit unions for their savings needs. It highlights key aspects such as interest rates, fees, membership requirements, and the safety of funds, offering readers a well-rounded understanding of credit union savings accounts.

How Do Credit Union Savings Accounts Work? (2024)
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