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Credit Unions versus Banks

JenniferE | Nov 19, 2009 |

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In today's economy, money is tight and we need to protect and store our money in the best place possible. The big question is do we use a bank or credit union? Most people and economists today are saying go with the credit union. In general talk, anyone I know who uses a credit union is very happy with it. Most with a regular bank account can go either way. The fact of the matter is most of us do not know what the difference is between the two, and we typically use banks out of default. There are many underlying differences.

What I found is that many, but not all, credit unions offer better rates then banks do. The other is banks profit off of their members. If you use a bank, you are making money for them. At a credit union you can actually profit. Profits are returned to their users through dividends. So wait, your making money with a credit union and not be used for money like at a bank? That's exactly right!

Now to what most people look for instantly, the interest rates. Banks tend to have higher interest on loans and bills due, but some of the lowest interest rates on CD's and Savings Accounts. At this point does this surprise you? The differences are really substantial. If you are in the market for a loan make sure you review all the rates carefully. Check your local credit union before you decide to use a bank. Most likely you will get a better deal with them, and they will be more flexible with working with you.

Next, credit unions give stake to their clients. When you become a member of a particular credit union you gain part ownership of that center. This does not mean that you have full rights and can change the business as you please, but it gives you the feeling of being part of something instead of being seen as just another dollar. You do have the right to vote for boards members and control who is in charge of your credit union. A bank will not give you a vote.

Are you wondering if credit unions are insured like banks? That was a huge concern for me. Yes, they are insured. Banks are insured through the FDIC and credit unions are insured through National Credit Union Share Insurance Fund. It is run by a government agency. No worry there.

Another thing to look at is the sharing of information. Credit unions have no problem sharing their information and new ideas on how to be more successful and driven. Banks, on the other hand, are reluctant to give up information. It is a competition for them, and the sharing of information with competitors would drive them to the ground.

If you want a voice and stake in where you put your money, then pull your money out of that bank account and move it over to your local credit union.