If your goal for 2023 is to save  as much as possible for a new car, your first house, or other monumental life achievement, one smart option is to switch from a traditional bank to a credit union. Credit unions often give their members higher interest rates on savings and offer many other savings-boosting benefits. Keep reading to learn how joining a credit union can help you keep more money in your pocket.

What are the benefits of using a credit union vs. a traditional bank?

First things first: What is a credit union, anyway? A credit union is a member-owned, not-for-profit financial institution. In other words, it’s a cooperative that belongs to its members, not to shareholders or a corporation like traditional banks. Credit unions offer many of the same financial services that banks do, like loans, credit cards, and deposits. Like traditional banks, they charge members interest and account fees in order to make a profit—but unlike those banks, profits are reinvested back into the credit union’s members in the form of reduced fees, higher savings rates, and lower loan rates.

One of the biggest advantages of credit unions is that they exist solely for the benefit and welfare of their members. A bank, which is usually owned by investor-shareholders, has a responsibility to ensure those shareholders receive good returns on their investments. Most banks will advertise that they exist to serve their customers, but they exist to serve their shareholders, too—and those profits usually come in the form of high interest rates, strict penalties, and abundant fees.

Credit unions are often formed to support a group of people who share a common bond, like place of employment, geographical location, or religion. This makes them much more community-oriented than banks typically are. They also may be smaller than banks, and are led by volunteer board members, both of which lead to a more personal touch than you’ll find at a bank.

One of the biggest benefits of joining a credit union, though, is the reason we’re all here: they can help you save significantly more.

Why should I put my savings in a credit union?

Since their members are also their owners, credit unions will provide members with the most favorable terms they can afford to offer. This usually includes:

• Better interest rates. On average, credit unions offer higher interest rates on savings accounts, checking accounts, and deposits than banks do. This helps your money grow faster.
• Lower interest rates on loans. For example, a five-year car loan might carry a 5% interest rate at a bank, but 3% at a credit union, which is a significant difference in savings over the life of the loan. That’s more money in your pocket!
• Fewer fees. Credit unions rarely charge monthly maintenance fees, meaning you won’t have to pay just to keep your money somewhere. The same goes for excessive transaction fees, minimum balance fees, early account closing fees, paper statement fees, debit card transaction fees, ATM fees, and all the other fees banks have come up with to turn a profit.
• Lower minimum balance requirements, if any. Some credit unions do away with minimum balance requirements completely; others do have them, but keep them much lower than those required at banks.

What type of savings accounts do credit unions offer?

Like banks, credit unions vary from one another in terms of options. However, most credit unions offer:

• A traditional savings account, sometimes referred to as a deposit savings account. These can usually be opened easily, with a very low minimum deposit, and will pay you interest on any future deposits you make.
• A money market account. These accounts usually pay higher interest rates than traditional savings accounts, but will require you to maintain a higher balance.
• Specialty savings accounts. These are ideal for people who are saving towards a specific goal, like a house or education. Student savings accounts in particular tend to have features that make banking easier for young people with modest financial means, like no minimum opening deposits and no monthly service fees.
• Individual Retirement Accounts (IRAs) allow you to save for retirement on a tax-free or tax-deferred basis, depending on the type of IRA you choose.
• Share Term Certificates (STCs) are the credit union equivalent of a Certificate of Deposit. Users agree to essentially lock their savings away for a set time period, and receive the highest interest rate of any savings account type. The longer the time period (or “term”), the higher the rate.

How do I find the best credit union savings account for me?

If we’ve piqued your interest and you’d like to find a credit union to join, your first order of business is ensuring you have the necessary documentation. Usually you’ll need a government-issued ID such as a license or passport; your Social Security card; and proof of your address, such as a bill with your name and address on it.

Finally, you’ll need to have some money on hand—it usually costs $5 to $25 to open a credit union savings account, which stays in your account and maintains your membership.

The final next step is to find a credit union, and we’ve made it simple! Just visit our credit union finder, which helps match you with options based on:

• Geographic location. Many credit unions serve anyone that lives, works, worships or attends school in a particular geographic area.
• Place of employment. Many industries have their own specific credit unions, and some individual employers have their own credit unions, as well.
• Membership in a group. This can be a place of worship, a school, a labor union, or even a homeowners’ association.

If you still have questions about joining a credit union or their benefits, visit mycreditunion.gov for more information.