Why are credit unions in the US exclusive?

One thing I’ve noticed is that US credit unions are nominally exclusive as to who can join, but in practice, they’ve got a list a mile long of ways to qualify that it doesn’t seem that they really care about who joins. What’s the point of having these sometimes bizaarely broad acceptance criteria? It seems to me that declining someone’s business because he doesn’t work for one of a dozen employers listed on a form, doesn’t have a degree from a list of six schools, and lives 1 mile from a hundred square mile automatic customer inclusion area isn’t a good marketing practice.

I am a member of a credit union that is nominally for schoolteachers, but their forms say they’ll take anyone who is a current student at or has a degree from my alma mater, period. It doesn’t matter what you studied or whether you ever intend to teach, bam, you’re in.

Navy Federal Credit Union will apparently take members of any service (Army, Marines, etc., civilian employees of the Department of Defense, contractors thereto, and immediate family. I think I could join, but there isn’t really a point because I have more credit union memberships that don’t use than I can really deal with already.

Remember that credit unions are tax-exempt, and require a state or federal government charter to operate, which defines a “field of membership”. As it is, regular banks lobby to have the tax exempt status removed, and “level the playing field”. As you open up credit unions to function more like general purpose banks, the government subsidy they receive through that status becomes easier to question, either by competitors who feel they have an unfair advantage, or people who feel that the government is losing too much revenue through their existence.

Here’s an example of the kind of accusation that really token membership restrictions can lend creedence to:

http://www.taxfoundation.org/blog/show/26743.html

I make no comment on whether the $3 billion / year figure is any where near correct.

My credit union used to be the Teacher’s Credit Union when I was a kid - I had an account there because my mom was a teacher. At some point in the 90’s they became Palmetto Credit Union and now anybody can join - not even technical obstacles as far as I know.

Just looked that CU up. They do have a membership restriction:

“Palmetto Citizens membership is open to any individual who lives, works, worships or attends school in Richland, Lexington, Fairfield or Newberry counties of South Carolina.”

That said, it’s a pretty weak restriction, compared to the restrictions that CUs often had in the past.

I’m a member of the University of Wisconsin Credit Union; it’s open to current and former faculty, staff, and students of the UW system, as well as immediate family members of any of the above…and anyone who lives or works within 5 miles of a UWCU branch. :eek: No wonder the commercial banks have been trying to strip CUs of their tax-exempt status.

Around 10 years ago banks went to court to restrict credit union membership. The case went to the Supreme Court and the banks won. But Congress just changed the credit union law so the court case was no longer relevant. That’s why now so many CUs are very easy to join.

Um, I can’t find a single one to join.

Tell us your location and occupation.

Also, you don’t have any relatives in the military, teachers, big companies?:confused:

I’m not so sure. Are your parents, spouse, siblings, or children a member of any credit union? If so, you may be able to join.

Call the alumni office of all schools that you have qualifications from and ask. My alma mater, if you call, would probably refer you to the schoolteachers credit union I mentioned before.

I’m surprised at the number of credit unions I can join that have branches in the local area. I even joined one on a whim at a kiosk they set up one day during a membership drive. I thought “why not” and signed up with a token deposit made up of cash that I fished out of my pocket. I’ve not made any transactions since and they may have spent more $ sending me statements than I have in my account.

I know my father is, or at least was, a member of a credit union that I’m not a member of. I could probably give him a call today and be a member by the end of the week. Since credit union membership is for life even if you lose your membership qualification, I find it difficult to believe that he would have abandoned membership.

Not to mention, a lot of them have affiliate groups that are quite easy to join.

For example:
https://www.penfed.org/howToJoin/overview.asp

  • donate some blood and you’re in.
  • Join one of the military associations (at least some of which are open to anyone who ponies up a small fee).

http://www.nasafcu.com/l2.aspx?ci=98

  • some of their affiliated organizations are free (a NASA FCU employee pointed this out to us when we happened to be walking by the grand opening of a new location - as we are already members of another credit union we weren’t tempted).

Now, credit union membership might be less useful if there’s not a physical branch somewhere at least somewhat accessible to you. The main branch of ours is on the other side of the Potomac River and they have no branches on our side of it. However, 99.99% of our interactions are electronic including when we’ve taken out loans (faxes do for signatures). Rarely I’ll need to deposit a check and then I have to either mail it, or go to an affiliated credit union that takes deposits (e.g. Pentagon FCU will accept deposits at their ATM a mile from my house). But anyway, we could get to their offices if we needed to. If you’re 300 miles away from the nearest branch, this might be a problem.

And of course ATM usage: most credit unions allow other CU members to get cash without a surcharge, but if you don’t have alternate CUs near you, then you’re stuck with using a commercial bank - which DOES charge a fee for non-clients.

I will also note that for things like mortgages, a credit union might not be the best rate-wise or service-wise (we’re in the middle of refinancing and they didn’t send us lock-in paperwork until nearly 2 weeks after we applied, for example). For other loans, ours has been stellar.

Self-employed, live in the US. Went to school abroad.

Nope, don’'t have any relatives in those categories.

Where in the USA? Obviously, if we’re talking about US Credit Unions, you live in the USA.

Often, where you live is a sufficient criterion for CU membership. In post 5, the CU is open to people who live/work/worship/study in certain counties. Locally, there’s a CU open to residents of my county (and possibly adjacent ones).

There are online search engines to find a credit union that don’t require much information – the engines ask for zip code at minimum, and then present a list of nearby CUs and their branches. One that I just used said that it’s open to residents of Denver, Jefferson and Arapahoe counties (which is about 75 percent of Colorado’s population); Denver or Jeffco school district employees, students, alumni, and families; and Safeway employees and their families.

CU’s often allow membership based on your field of employment. My CU let me in because I’m a registered nurse, and then allowed some of my family members based on their relationship to me.

I sent to the CU 10 or 15 years ago after getting angry at my bank for nickle and diming me for everything under the sun. My CU doesn’t do that and I have been very happy with them. I did not use them for my house or car purchases, though. I got better deals elsewhere.

Here in NC the state employees credit union is bigger than many small banks. They are in the top 5 of the US in size for a CU. They have been around for a long while and they allowed many people to join including relatives of state and local government employees. Some members joined 50 years ago when their parents worked for the state and they stayed members ever since.