In the last couple of years, there has been increased interest in credit union membership. Many consumers are moving their money from banks to credit unions, in the hopes of avoiding fees and getting better yields on deposits.

However, not anyone can join a credit union. Credit unions have Field of Membership (FOM) requirements that members have to meet. Each credit union has its own rules, and you need to find out what those rules are before you join.

Why are there Rules to Credit Union Membership?

Today, it seems a little strange that credit unions have membership requirements. However, there are reasons that credit unions, by law, have to designate membership requirements.

Credit unions are actually cooperatives, and they are considered “non-profits.” As a result, they enjoy favorable tax status on the federal and the state level. Credit unions were created as a way for like-minded people to pool their resources. In order to be considered a credit union, a financial institution needs to define its “field of membership” and only accept those that fit the appropriate description.

Broader FOM Requirements

The rules of joining a credit union vary according to the financial institution. Some credit unions limit members to a certain geographic area, or require that you be employed by a specific company in order to join. The good news is that once you are a member of the credit union, you don’t have to close your account if something changes. If you leave the company, you can still usually belong to the credit union, since you joined when you were eligible.

Over the years, FOM requirements have broadened quite a bit. Many credit unions want to take advantage of the increased customer base that comes with online financial services. As a result, they look for ways to make it possible for more people to meet FOM requirements.

One strategy that has been employed by some credit unions is to open membership to members of a particular association or society. For instance, PenFed’s FOM requirements are that you have to work for the Department of Defense, or be a member of the National Military Family Association. Anyone can join the National Military Family Association by paying $20. Once you pay your $20 and join the that specific association, you meet PenFed’s requirements.

Some banks are upset about the tactics used by some credit unions to get around the technicalities of FOM requirements. It’s become a bit of a controversy, with banks charging that credit unions are abusing their favorable tax status and violating the spirit of why credit unions were created.

If you want to join a credit union, you need to find out what the membership requirements are. Not all credit unions have widened their FOM requirements, so you might still need to prove that you are eligible for membership. Find out what is required for you to join, and then find out if you can meet those requirements. In some cases you might be surprised at the small effort that goes into joining.