What is the major differences between a credit union and a bank?
I have a checking and savings with a credit union that my mom set up for me when I was a child but now am looking to get a joint checking account. Should I go with a credit union or bank?
- Mel MLv 61 decade agoFavorite Answer
USA Today had an article on March 31, 2008 which explains the advantages of a credit union. The text of the article is below. Here is a link to the article:
In these uncertain times, some folks aren't comfortable unless their savings are safely ensconced in a bank account that's fully insured by the federal government. And even then, they may get a little anxious if their bank installs new carpeting or repaves its parking lot.
The trouble with this strategy is that you'd probably earn more money shaking out your sofa cushions than you'd get from the average bank certificate of deposit. Since the Federal Reserve started cutting interest rates in September, CD yields have fallen through the floor. The average rate for a one-year CD was 1.97% last week, according to Bankrate.com. The average rate for a five-year CD was a feeble 2.77%.
Some banks, though, are offering higher rates, so it pays to shop around. While you're looking, here's something else to consider: credit unions. Rates on credit union CDs, often called share certificates, are often higher than rates on bank CDs. Several credit unions are offering 4% or higher for one-year share certificates, according to Bankrate.com.
And you don't have to sacrifice security to get these higher rates. Most credit union accounts are federally insured for up to $100,000 — or $250,000 for insured deposits in a retirement account. Joint accounts are treated separately for insurance purposes. So if you and your spouse each has $100,000 deposited in a credit union as individuals, you could also set up a joint account for $200,000, raising your total coverage to $400,000.
Like federally insured bank deposits, these accounts are backed by the full faith and credit of the U.S. government, says Fred Becker, president of the National Association of Federal Credit Unions. (The only difference is that credit unions are backed by the National Credit Union Administration, while bank deposits are covered by the Federal Deposit Insurance Corp.)
Hope this helps. Good luck!
- contemplatingLv 51 decade ago
Look around and see what is being offered. What your personal needs are should drive you decision. Where your bank is and what they offer can often be a driving factor.
Credit unions vary tremendously on how much money you need to keep in an account (as a buy-in). Mine was only $5, but I've seen them at several hundred dollars. Mine also refuses to do certain things for free (like they won't accept unwrapped coins -- whereas I think most banks still will). Also having a long history with a smaller credit union or bank is a good idea because sometimes they'll take care of you for loans (esp. before you've really established any credit..some will take into account your history with them).
Currently I personally use 5 different 'bank' like businesses (aside from credit cards) -- you're not limited to one bank.
3 are banks
1 is a credit union
1 is an insurance co-op
The insurance co-op treats me the best for 90% of things, but doesn't have enough branches placed in the right area for somethings. And they don't do their own mortgages (which make their mortgages not worthwhile). I would recommend the insurance co-op to whoever is elgible. They even give me money back when they take in too much.
The credit union did well for me on my HELOC and is in a convenient location for me. However, they usually are far worse for rates than the ins. co-op.
One of the banks is really great for my use of it (it's awesome, they send me the deposit slip everytime someone deposits money into my account [which they allow!]).
One bank gave me a great loan rate.
The other bank bought a loan from a bank I liked much better (so I'm stuck with them until I can get that property paid off!).
- Heather VLv 61 decade ago
The members of the credit union "own" it. Everyone who has a credit union checking account has to have a saving account with a certain amount.
- 1 decade ago
I would go with the credit Union. The min on their savings account is typically very low, usually 25 bucks. A CU is actually a non profit so the profits are poured back into the CU. Banks have boards and shareholders that they are beholden to.