An underused money tool that could help a new generation of adults on their path to prosperity isn’t a smartphone app, a virtual currency or a digital payment system.

It is an old-timey credit union.

Credit unions, if you are unfamiliar, are like nonprofit banks. They may not satisfy all your money-management needs, but you are missing out if you are ignoring credit unions, which have great interest rates on auto loans, consumer-friendly checking and savings accounts, and low ongoing credit card rates.

One example: Fully financing a $30,000 new car over five years would cost about $1,250 less in interest with a credit union auto loan compared with a bank auto loan, based on national average rates.

Competitors — megabanks, small community banks and online banks — have their strengths and weaknesses. But this isn’t a binary choice: You can use a credit union for the things it excels in and use other financial institutions, too.

Here are six reasons to add a credit union to the mix.

Not a bank. Credit unions have the same basic products and services as banks, and deposits are insured. But you are not just a customer at a credit union; you are a member and part owner.

Personal touch. Consumer Reports said credit unions are among the highest-rated services it has ever evaluated, with 96% of members highly satisfied vs. 80% for the three biggest national banks. Other surveys suggest superior digital communication has helped banks close the customer-satisfaction gap in recent years.

Superior rates. Credit unions don’t have to return money to shareholders like publicly held banks, so they plow profits back into offering high rates on savings, low rates on loans and generally fewer and lower fees. Auto loans, especially, have traditionally been far superior to those at banks on average — often a full percentage point or more cheaper. Credit unions also offer mortgages and personal loans. On the savings side, including CDs and money market accounts, you will generally find higher rates than megabanks.

Easier to join than before. Becoming a customer of a traditional bank is still easier than for a credit union. With credit unions, you must qualify. But that could be based on where you live or an organization you belong to. Some credit unions even allow you to become a member by making a modest donation to a nonprofit.

ATMs and branches. Many credit unions have banded together to offer nationwide access to ATMs and branches.

Tech isn’t that limited. Most credit unions offer online banking, bill paying and mobile deposits.


Gregory Karp is a writer at NerdWallet. E-mail: Twitter: @spendingsmart.