Bank vs Federal Credit Union

 

What is a Bank?

A bank is a financial institution that holds customers funds and offer various loan and credit products. There are many types of banks from large commercial banks with offices across the US and Internationally, Regional banks that are spread over an extended area or smaller local banks with only a few branches. Some banks now are online only.

Banks are for profit companies that have a board of directors and shareholders that they answer to. Since banks are usually larger institutions they tend to have more conveniences available then credit unions like more ATMS, Online Bank, Mobile check deposit or customer service.

Most banks are insured by the Federal Deposit Insurance Company or FDIC which backs account balances under a certain amount with money from the federal government.

 

What is a Credit Union?

A credit union is a Non-profit organization that offer banking services to their members. Most credit unions are more localized and there may be special requirements for joining. Credit unions are owned by the members and are chartered as Non-profits. Credit unions tend to have lower fees for some of their products due to being a non-profit. Some credit unions offer a similar protection to FDIC from the National Credit Union Association or NCUA.

 

Picking the Right Bank or Credit Union for You:

Location/Features- If the bank does not have physical locations near you how do you access the funds?  Non atm fees? Can you use other institutions for free? (some credit unions allow)

 

Fees: Do they have a monthly fee for checking/savings? What about overdraft? Statement fees?

 

It is important when opening a new account to ask questions especially in regard to fees. Since bank fees can be varied your banker should be able to go over the common fees for each type of account and how to avoid them.

You can also use tools like WWW.BANKRATE.COM to search and compare banks online.


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