When deciding where to do your banking, you have the option of either a traditional bank or a credit union. Before you chose, it’s important to understand the differences between a credit union and a bank. One may work better for you and your family than the other.
Once of the biggest differences between credit unions and banks is how they are run. Let’s take a closer look at both so that you can make an informed decision:
Credit Unions:
Credit unions are locally owned by members and are operated by members as well. That’s why if you want to belong to a credit union a membership is always required. Credit union membership is often based on employment (or family relationships) in the military, schools, government, and various other local employers. Because you are a member and not just a customer at a credit union, everyone has equal ownership and it’s often an overall more satisfying banking experience because of that.
Non-Profit Means You Save More –
At a credit union, the focus is on its members rather than turning a profit. That’s why credit unions are non-profit. Given that the members are owners, regardless of how much money is in their account, each member has one vote in electing board members. Members can also be nominated or they can run for election to become a board member. Credit unions also give back to their members because they are non-profit. They will offer higher savings rates and lower interest rates on loans. Oftentimes, they will outshine what any local bank can offer.
Tax Exempt Means You Get Better Rates –
Credit unions are often exempt from many state and federal taxes, resulting in a variety of benefits for members. With the money saved from tax exemptions, credit unions are able to offer lower interest rates than banks for mortgages, loans, and credit cards, particularly if you have good credit. Credit unions are also able to offer high-interest rates on savings accounts, and lower penalties for overdrafts and late payments. You also have a better chance of getting a free checking account at a credit union as banks often need to attach a fee to checking accounts in order to generate revenue, whereas credit unions are non-profit.
More Amazing Benefits –
Credit unions have never needed to be “bailed out” like some major US banks have. Credit unions just don’t have those kinds of problems and most likely never will. Credit unions work together with other local credit unions to share their resources, and to bring convenience and other benefits to their members. The CO-OP ATM Network is just one prime example of this teamwork between credit unions to assist their members. Also, deposits are federally insured by the National Credit Union Administration so you never need to worry about your money.
Banks:
Banks are publicly traded for-profit entities that always have the bottom line in mind. Bank customers have ZERO ownership interest in the institution, and they have ZERO say in how things are done. Banks are owned by investors who only care about making a profit and keeping the shareholders happy. Shareholders and investors are the ones who make all of the decisions and who put all of the policies in place. Customers have no voting rights, they can’t be nominated or elected to the board, and they have no say in anything. Also, because banks are in competition with each other, that prohibits them from working together or sharing resources.
Convenience –
There are certain advantages of using a bank that a credit union may not be able to offer. Often times, there may be very few, or even only one, branch or location of a credit union in your town. Banks are typically much larger chains, many even on a national level, so there are more locations at your disposal no matter where you are. This offers greater convenience, and the same applies to ATM machines when you need to make a quick withdrawal and don’t want to pay a user service fee.
Variety of Services –
Banks do not require membership, and anyone can join, so there is no need to have any family member or work relationship. You may also find that banks are able to offer a larger selection of services than credit unions may be able to, such as financial planning, retirement funds, and stock investing. Banks also have more money and power at their disposal so they invest in themselves by way of improving their technology. Banks usually offer better online services such as online banking, mobile banking apps, virtual wallets, Apple Pay, remote check deposit, and much more.
Another important factor about banks is that they can make international traveling easier. If you travel a lot to other countries for work or leisure, having a national bank might be a better option for you because banks likely have more ATMs abroad. Credit unions may offer lower fees for international ATMs, but with some major banks, you might not have to pay any fees at all. Banks are also federally insured, much like credit unions, but they are backed by the FDIC instead of the NCUA.
Conclusion:
When shopping for a financial institution, your decision should be based on what best meets your personal needs and the needs of your family. For some people, a credit union may work better. While for others, a traditional bank just makes the most sense. The certified credit counseling professionals at Advantage CCS can help you examine and weigh your options when deciding on where to do your banking and the best way to manage your funds to ensure financial security. Give us a call today toll-free at 1-866-699-2227 or visit us online at www.advantageccs.org
