When it comes to dealing with financial institutions, people are often left with one big question. Bank or credit union? And that is certainly understandable. Everyone should be concerned about exactly what type of place they are putting their money into and to a larger extent, who they are entrusting with their money. While traditional banks always come to mind first, make no mistake about it; credit unions are certainly making a name for themselves as well.
As more and more people get tired and fed up with banks imposing never ending (and increasing) fees on them plus providing them with poor customer service, many are turning to credit unions. Before we do go further, it is important for you to know about two major differences between both institutions. Big banks are the possession of their shareholders and are therefore profit oriented above all else.
Credit unions on the other hand are for the most part owned by the folks who deposit money with them. They tout themselves as non-profits, but make no mistake about it, they do turn a profit. But the neat thing is that their excess funds are put right back into the credit union for their depositor’s benefit. Pretty big difference, huh? Regardless of which one chooses, both entities do offer insurance for deposits up to $250,000. This is per account.
Credit union insurance is provided by the National Credit Union Administration (NCUA), while the commercial banks offer theirs through the Federal Deposit Insurance Corporation (FDIC). Both of them are federal agencies. So, which one do you go with? Well, that depends on your needs. Credit unions do have a reputation for far better customer service. But if you are a person who travels a lot you can count on a large bank to have a presence almost everywhere.
For example, you can best believe that a big commercial bank will more than likely have ATM’s and maybe even branches in foreign countries. And a large bank will usually offer you better rates on things like mortgages as well. On the flip side, the majority of the time credit unions trump banks when it comes to interest rates on accounts and fees as they relate to credit cards. Auto loans are also traditionally better deals with credit unions.
So all in all it depends on your particular needs. Some people who can afford to so, have one account in a commercial bank and another in a credit union, giving them the best of both worlds.