Got money? Then, you also probably have a long line of financial organizations hoping to hold that money for you, especially during the unpredictable year we’ve been having. With both banks and credit unions vying for your business by offering pie-in-the-sky financial promises, it can be nearly impossible to decide where to land.
While there is likely no perfect answer, examining your specific circumstances and matching them to the best financial partner can help ease your worry and keep your financial feet planted on solid ground.
First, let’s start with the big stuff – security. Fortunately, when it comes to the security of your funds, both traditional banks as well as credit unions perform very much the same. Both are backed by large government agencies that insure deposits up to $250,000 (banks are backed by the FDIC while credit unions are supported by the NCUA). Either way, you can sleep safe knowing your funds won’t just up and disappear once they leave your fingertips.
Secondly, let’s look at service offerings. When it comes to available products and services, both types of institutions tend to offer similar products including checking and savings accounts, auto and personal loans, and mortgages along with other common investments like CDs. Additionally, both have experts on hand ready to help guide and educate customers on the best account options and lending opportunities.
The most significant factor differentiating banks from credit unions has to do with their bottom lines. Traditional banks operate as for-profit institutions whereas credit unions do not, and this one thing can make a huge difference for individual customers.
Despite banks’ motivation to make a profit off of their clients (or maybe because of this fact), these organizations are typically more convenient for the user with multiple locations and a higher number of ATMs. They also tend to be much better known, so you are likely already familiar with where the big names are located. You might not be as well-versed on your credit union options, though. Head over to https://www.mycreditunion.gov/about-credit-unions/credit-union-locator to see which ones are located in your area, so you can start comparing apples to apples.
When it comes to online banking capabilities and available apps and digital services, banks also tend to stay ahead of the curve. Unfortunately, credit unions do not always have the large margins at their disposal to implement the newest leaps in technology. It should also be noted that credit cards are not always an option with credit unions either, so those wishing to keep all of their banking streams consolidated under the same umbrella will want to inquire about availability.
That doesn’t quite seal the deal against credit unions, though, as these kinds of institutions are commonly chosen for their superior customer service. That is not to say that banks cannot offer a comparable level of service; however, they can be considerably larger than credit unions, and thus, provide a far less personal experience for their clients. When using a bank, it is more likely that a customer becomes another number, while credit unions are much better at knowing and responding to customers by name and need.
Another advantage of credit unions comes in the form of increased eligibility. Unlike banks which can have much stricter requirements, credit unions often offer easy roads to membership. While some credit unions are limited to certain organizations (such as the military, a particular company or a certain profession like teaching), many of these organizations are open to the public, providing you become a member. Once membership is secured (often for free or by setting up a checking account or the like), you immediately have access to the perks they have to offer like lower transaction, overdraft and loan origination fees.
At some point, after all the researching and hand-wringing, you are going to have to choose. What’s it going to be? Who has earned the right to house your hard-earned dollars?
If you still find yourself caught somewhere in the middle, reach out to existing customers you might know. Ask a family member or friend in your community who they bank with and how their experience has been. What do they like and dislike? What do they wish they would have known before handing their life-savings over to a complete stranger? Now is the time to get the answers because while moving your money isn’t the most painful thing to do, it does require a fair amount of time and paperwork – and with the way this year has been going, who really has time for that?