Are you trying to decide between using a credit union or a bank? If so, there are a number of things you should know about both banks and credit unions. This list of facts will help you weigh your options.
What is a Credit Union?
A credit union is a financial corporation that is member-owned. It is controlled democratically by its members as well. The mission of a credit union is, generally, to operate economically so the members can reap the benefits of having less expensive financial services and so credit can be provided at competitive rates.
How Does a Bank Differ From a Credit Union?
Banks are financial institutions that are owned by investors. The investors are oftentimes a myriad of stockholders or, they can be a lower scale group of large investors. There are both national and state banks.
Similarities between a Credit Union and a Bank
Both credit unions and banks offer the basic things you would need in a financial establishment. They have:
· Checking accounts (personal and business)
· Savings accounts
· Auto loans
· Home loans
· Refinancing of home loans
· Money market accounts
· Certificates of deposits
· Online banking
What are the Pros and Cons of a Credit Union vs. a Bank?
There are both pros and cons to both credit unions and banks. Here are some of them:
Credit Union Pros
· Offer better deals
· Don’t try to maximize profits at the expense of the customer
· Pay more interest in savings and CDs
· Low loan rates
· Free checking
· Money is insured
Bank Pros
· Community banks often offer pros of credit unions listed above
· Easily accessible
· Most offer specialized services such as trust funds
· Money is insured
Credit Union Cons
· Not all credit unions adhere to the pros mentioned above
· Receive tax breaks that are not necessarily passed back to members
· May require eligibility
· Specialty services may not be available
Bank Cons
· Customer benefits are not as good as credit unions
· Higher interest rates
· Maximize profits
· Customer service is not as personal as credit unions
How Do I Qualify for a Credit Union?
Credit unions are set up to where there is something the members have in common. To find one you qualify for, you may have to do a little searching, but chances are good you’ll find one somewhere. Here are some of the circles credit unions are offered in:
· School
· Church
· Geographical area
· Being related to a member
· Organization membership
How Does it All Add Up?
Which is best, a credit union or a bank? Much depends upon what you want or need from a financial institution. If you are looking for an establishment for complicated, unique matters such as trust funds, etc., you may have better luck at a bank. If you are hoping to get some discounts and take advantage of lower interest rates, a credit union might suit you well. Finding information online or personally visiting a branch is the best way to find out.
