Credit unions have over 100 million members in the US, and provide companies and entrepreneurs with many of the same financial products as traditional banks. You can get business accounts, business loans, and a wide range of business services such as advice on how to grow your company. However, credit unions are not the same as banks.
If you’re thinking about getting a business checking account from a credit union instead of a big bank, you’ll want to know a bit about the advantages and disadvantages of using a credit union.
This article covers all you need to know about credit union business accounts — including some options to consider which offer business banking services. We’ll also highlight an alternative for comparison — the Transferwise borderless account for business.
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Now, back to what you came here to read.
Let’s start with the basics — and one of the most common misconceptions about credit unions.
A credit union is not a bank.
Although credit unions offer many of the same services that banks do, there are significant differences in how they’re run, from which customers are eligible to use them, to how products, fees and penalties are set.
Here are some of the most important things you need to know about credit unions:
To get a bank account you’ll need to demonstrate your eligibility. This usually involves a process of providing ID and address documents, and completing some paperwork.
However, credit unions have members — not customers — and to become a member you’ll need to fulfil a different set of eligibility requirements.
Credit unions select members based on their ‘field of membership’. That means there’s a common bond between all of the members — this could be any of the following:
- Members work for the same employer, or in the same field of work
- Members are all part of the same community group, such as a church, alumni association, labor union, or homeowners association
- Members are all part of a specific charity or advocacy group
- Members all live in the same town or region
- Members share family bonds
In basic terms, credit unions exist to serve their members. This means that, whereas banks are typically run by a board of directors looking to produce profit and increase share price and dividend payments, credit unions are owned by their members, and a board of volunteers act as the union’s directors.
These volunteer directors are voted for by members — usually with a one member one vote system, meaning you have an equal say in how the credit union is run, regardless of how much money you hold with it. This member first policy also extends to other services, and credit unions are often involved in local charities and in educating their population on good financial management.
Credit unions are set up with a different philosophy compared to banks. One major point of note is that they’re not-for-profit organizations. This can translate into lower fees and better terms if you want to take a loan or open an account.
You may know that banks in the US are usually insured by the FDIC Deposit Insurance Fund. Credit unions have a different system. All federal credit unions and most state-banked credit unions have insurance through the National Credit Union Share Insurance Fund. This means your money will be protected in the event the credit union runs into difficulties or fails entirely. Up to $250,000 per member is covered.
However, it’s not mandatory for credit unions to have this insurance, so you’ll need to check the details for your chosen credit union before you sign up.
If you’re thinking of using a credit union for your business banking needs, you’ll want to think carefully about the pros and cons. Here are a few points to consider:
- You’ll need to check your eligibility for credit unions carefully, and may be limited to those which cover your geographic area or line of work
- Products available through a credit union may come with lower fees than banks
- Credit unions are typically smaller and more local than banks — this may mean a more personal service, but fewer branches and a smaller ATM network
- Check out the online banking options available through your chosen credit union, as the services may differ from traditional banks
- Large banks might have a broader range of tech solutions for businesses, such as integration with online accounting products
The right credit union business account will depend a lot on your personal preferences and circumstances.
You’ll first need to check which credit unions you may be eligible to join. Because credit unions often serve a specific population, this may mean the branch locations are limited. It’s worth checking out where your local credit union office will be if you’ll need to use physical services such as depositing cash into your business account.
Once you have a shortlist of credit unions based on your eligibility and location, it’s time to look at the fees and features of the products available. Finding a business checking account with no minimum balance or monthly service fee is a good idea for many newer business owners. You’ll also want to check out the transactions costs, thinking carefully about the type of transactions you’ll need to carry out regularly.
Finally, it’s worth thinking about the other services you may need, either now or as your business grows and develops. Can you send and receive international payments easily, for example? This will become important if you start to work with international customers or suppliers. Can you take a loan to invest in your business or increase your working capital? By thinking through questions like these you’ll be able to find a credit union account which works for you now, and will be able to continue to serve your needs in future.
There are many different credit unions operating in the US. Not all of them offer business products and services, but it’s well worth checking out the local credit unions in your area to see what they promote. To help you get started, here are a few interesting credit unions which offer business friendly products to their members:
This is the largest credit union in the country, with eligibility broadly open to anyone in active service in any of the branches of the armed services, veterans, Department of Defence civilian employees, and their family and household members. Business services available include checking accounts, credit cards, loans and payroll services. You can also bank online and using an app for convenience.
To join this credit union, you’ll need to become a member of the Consumers Cooperative Association, which you can do by paying a $5 membership charge. There are business checking and savings accounts on offer, including a Business Money Market account which offers returns on any money invested. You’ll also be able to apply for additional services such as a business visa card or loan.
The DCU field of membership covers some towns in Massachusetts and Georgia, as well as a large list of employers, organizations and homeowners associations. If you live, work, worship or study in the towns highlighted, have or had a job with one of the eligible employers, or have a family relationship with anyone who does, you can join.
DCU offers business banking services, including checking accounts and loans, and also has an equity crowdfunding scheme which is an unusual option and may be worth considering for some business owners.
Federally insured credit union, with a range of business checking accounts, and additional business services such as loans and credit cards. America First has over 120 branches and 810,000 members across Utah and Nevada. Although the field of membership is somewhat narrow, America First is an interesting option to those eligible thanks to the sheer range of product options available, as well as a decent online banking system.
Although the name sounds like few people will be eligible, BECU actually offers membership to any resident of Washington state, and some counties in Oregon and Idaho. If you or a family member live, work, study or worship in these areas you may be eligible, and the field of membership also covers employees of Boeing, other credit unions and their family members. Once you join, you can get a business checking account, cash back visa card and more.
Listed as the 12th largest credit union by value, Suncoast is based in Florida and has 500,000 members. You can become a member if you live in certain areas of Florida, or went to school there — or if a family member is already a Suncoast member themselves. You’ll be able to get a business bank account, loan or other useful products, and can access tens of thousands of ATMs on a fee free network.
Covering areas of Georgia, the Delta Community Credit Union has business checking accounts, savings accounts, a money markets account and additional services such as online and mobile banking and statements. You can choose between a business account with no monthly fee as long as you maintain a minimum balance of $500, or one which pays dividends based on how you choose to use it.
Getting a business account through a credit union can offer some advantages, such as a personal service and lower transaction fees. However, there are also some disadvantages to consider, so you’ll need to think carefully about how you expect to use your account and whether the credit union can provide everything you need. By spending some time on research, and looking at a broad range of accounts from traditional banks, credit unions, and alternative providers — like the Transferwise borderless account for business, you’ll find the account which suits you.
- MyCreditUnion.gov - How is a credit union different from a bank
- MyCreditUnion.gov - NCUA
- Navy Federal business services
- Navy Federal membership eligibility
- CCU - Business bank accounts
- CCU - How to join
- DCU Business Checking and Savings Accounts
- DCU Eligibility page
- DCU Equity Crowdfunding
- America First Credit Union - Basic Business Checking page
- BECU Membership Eligibility
- Suncoast Credit Union - Business page
- Suncoast Credit Union - Membership eligibility page
- Delta Community Credit Union - Business banking
- Delta Community Credit Union - Business Value checking account
- Delta Community Credit Union - Business checking account
Sources checked 20 June 2019
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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