I've always wondered why credit unions require you to open a membership account before they'll approve a loan. Whenever I think about it, it feels like going to a credit union just for a loan is cheating someone somehow.

Am I?

3 Answers 3


Nope. Credit Unions are for the customers. Since the customers own them, the credit union does what is best for the members. They aren't giving you money, they are loaning it to you for for interest. Furthermore then judged you like any other bank would.

High horse moment:

I believe the only reason you have to open an account, is because the banking industry didn't want to compete and got legislation to limit the size and reach of a credit union.

The credit union wants your business, and they want to work for you, but they are required to have these membership requirements because their lobby isn't as powerful as regular banks.

  • 4
    +1 If it is cheating, you are cheating yourself since you would be a partial owner. I'd give you another +1 for the high horse moment if I could.
    – JohnFx
    Commented Oct 12, 2011 at 21:26
  • 4
    Banks hate credit unions, but the nominal deposit isn't a conspiracy -- it a key part of the whole credit union scheme. A deposit account makes you a shareholder in the credit union, and credit unions only do business with members. Commented Oct 15, 2011 at 1:03
  • @duffbeer703 - all fine and good, I have no problem with $5 sitting in a saving account. But can't it be just my checking? Why couldn't it be just the loan for membership? The checking has the high interest rate, not the savings. I bet my CU as thousands of savings accounts with a $5 balance. It isn't a big deal, but it is a weird situation.
    – MrChrister
    Commented Oct 15, 2011 at 16:46
  • @MrChrister - As you said the savings account is the low interest return... so it costs them less and its governed by different rules. And while you may just have $5 you would be surprized how many member actually use their savings account because they have them that probably would just stick with a checking account at another bank.
    – user4127
    Commented Oct 16, 2011 at 22:29

Credit unions require you to open an account because of their history.

A credit union is just that: a union. Only instead of a union of workers collectively bargaining for better pay or worker's comp, they are lending each other money. They are chartered to offer their services to members of the union, rather than the public at large. For that reason, credit unions historically had targeted niche memberships (ie, employees at a specific company, or property with a specific hobby such as fishing).

Most credit unions these days attempt to skirt the issue, by claiming to serve members of a specific geographic area.

Anyway, membership is defined a owning a stake in the union, which is usually termed a share. By opening the account and "purchasing a share," you are becoming both an owner and member of the union, and are eligible for their services.

That's why the account is required before you can have a loan.

  • "Only instead of a union of workers collectively bargaining for better pay or worker's comp, they are lending each other money."
    – jldugger
    Commented Oct 13, 2011 at 15:35

Credit Unions turn a profit by lending money at a higher interest rate than their savings do, just like banks do.

It is an amoral feat, completely parallel to any moral weights you have assigned to "the system". If the most favorable circumstance is you receiving access to capital, then you can easily achieve that with zero reservations about the system that granted it to you.

  • Credit Unions are not-for-profit.
    – Alex B
    Commented Oct 18, 2011 at 17:58
  • "non-for-profit" does not mean "nonprofit", would you be more comfortable if I said "make money" instead of "profit"
    – CQM
    Commented Oct 18, 2011 at 18:17

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