In the last few years credit unions have seen a steady increase in customers and deposits.
A local credit union that I was affiliated with saw their total deposits more than double in the past 3 years. That's amazing growth!
A lot of this increase has to do with “big banks” being harshly criticized in the news. Bank of America was hit the hardest when they announced a $5 a month debit card fee back in September.
Most recently was November 5, deemed “Bank Transfer Day”, a coordinated effort by consumer groups to stray away from “big banks” and their monthly charges. Since September, credit unions across the nation have pulled in 650,000 new customers and over $4.5 billion in deposits..
Whats the big deal with Credit Unions
Banks and credit unions render some of the same basic services, and each offers different types of benefits for customers. If you don’t belong to a credit union, you might not know how they differ from banks.
Banks, which are usually shareholder owned, and for profit companies. Banks offer many different financial services from checking and savings, to loans and CD’s. Banks are federally insured through the FDIC. As a for profit organization, a banks first concern is to generate profits. It dose not mean that they do not care about their customers. It just means that they are looking for the best way to generate income from the services they provide. The profits that banks generate has helped them to offer a variety of services, as well as more branches, ATMs, and better online banking.
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Credit unions are non-for profit organizations that are member owned. This means that if you have an account with a credit union you are a member as well as an owner of that organization. Credit unions allow members to vote and be on the Board of Directors. Members only get one vote no matter how much money they have. This helps credit unions look out for the their members best interest.
Credit unions do make money, but it is used to fund required reserves. These reserves help the institution stay afloat during economic downturns, slower income growth and loan losses. Any excess profit that these credit unions make is given back to the members, in higher interest rates and lower fees. Being a smaller institution results in a more personal banking experience. It can also have a negative size as well. Because of their small size, credit unions may not have as many branches and ATMs, as well as a lower quality online banking experience.
Bank Vs. Credit Union?
So where is the best place for you to put your money? This is a hard decision with all of the banking options you have. When it all boils down, it comes to; what to what type of service are you looking for? If your looking for a checking or savings account or a small loan, a credit union may suit you the best. If you are looking for something more for your portfolio, a bigger bank may be the right choice for you since they can offer more on the investment side.
Which ever one you choose, a bank or credit union, be sure to get the most out of your banking institution.
In need of finding a good Credit Union to join? Check out the tool from buddy's over at Nerdwallet.com.