Credit Union vs Banks
So what is the difference between Credit Unions and Banks? This article will show the difference between the two.
- About Credit Unions
- About Banks
- Similarities Between Banks And Credit Unions
- Some Downsides To Credit Unions
- Some Downsides To Banks
- Final Thoughts
About Credit Unions
Credit Unions is a not for profit business. Any profits that they receive gets returned to their members by in a form of lower interest rates on loans, higher interest rates in their savings and free or lower cost services. Credit Unions always invests directly back to their members. They usually serve to those individuals that are usually members of the Credit Unions. The Credit Unions has members who acts like as co- owners and own a stake in the institution. Credit Unions are a member service driven organization. They are also federally insured by the National Credit Union Administration (NCUA). All deposits are insured by the NCUA for up to $250,000.00. NCUA also regulates all federal credit unions. Most of the Credit Unions are very friendly to their members and treats them as family. Credit Unions are also stricter rules on granting loans.
Banks is a profit oriented business. The Banks return profits to a small group of investors (stockholders). They invest in corporate bonds or in the stock market. The banks are usually controlled by stockholders and paid officials. They usually serve to anyone in the general public. The banks are very much a profit driven corporation. All banks must be federally insured by the Federal Deposit Insurance Corporation (FDIC). All deposits that are in banks are federally insured up to $250,000.00. The banks have a paid Board of Directors who represent the banks and customer does not have voting privileges.
Similarities Between Banks And Credit Unions
Both, banks and credit unions offer the following services to all their customers (or members): savings, checking, Automated Teller Machines (ATM), Certificate of Deposits (CD), Money Markets accounts and Individual Retirement Account (IRA). They both also offer loans, debit and credit cards, money orders and certified checks.
Both also offer some kind of fees if their accounts like checking accounts if they get over drawn or left idle for a long period of time.
Some Downsides To Credit Unions
Some of the downsides to the credit unions are that are related to some of the institutions of being a smaller in size (meaning fewer branches) and Automated Teller Machines (ATM) and possible lack of or lower quality of online banking options as the big banks offer.
Some Downsides To Banks
When some banks grow bigger in size, they tend to lose some of the customer friendliness that got them to be bigger.Some banks also has a problem in making some bad decisions when they are granting loans (one of main reasons for the bailouts here in the United States by the federal governments). Due to some of the bad decisions by banks, they in turn raise fees on some of the services to their customers.
When deciding where to open up an account or taking out a loan, always check out your options which is best for you and your family. Both banks and credit unions to a certain degree are very similar and you must weigh your choices before making your final decision.