Banks tend to have a wider breadth of services and features due to the heavy backing of their stockholders. They also tend to have much larger budgets for advertising, so more people are aware of their offerings. Large banks have more branches for easier access, but money is so accessible from other sources, such as cash back at time of purchase, this is no longer the advantage that it once was.
Credit unions are known for offering extremely friendly and personal service. Itâ€™s in a credit unionâ€™s best interest to understand and meet your needs and not just sell product. It seems that a credit union has your best interest at heart. Credit unions also have lower fees, and in some cases no fees for certain products and services. You also tend to earn interest or dividends on even the basic checking account. A credit union is more likely to work with you when a bank wonâ€™t.
Banks have higher fees, and more of their profit comes from fee based revenue. Some banks have bragged that 50%+ of the revenue comes from fees. I guess it makes their stockholders happy, but it ticks us off. Is it okay for them to brag about being greedy? The fees donâ€™t affect you as much if you have a strong relationship with the bank. It usually hits the lower income accounts the hardest.
Credit Unions have membership restrictions and sometimes lack the funds to offer some of the same products and services as banks. Smaller credit unions may not have business services, for example. Credit unions have fewer branches for access, but with the ease of point of sale withdrawals, online banking, and direct deposit, this is pretty much a non-issue now. Some credit unions also overcome this with shared branching services, which means you can visit the branch of another credit union and not be charged any fees. Credit unions have a lower cap on the amount they can loan than a bank would have. Credit unions do have an insurance cap of $100,000 per deposit account. You would just want to split it up into separate accounts to make sure all of your money is insured.
For most people? Lower fees, better interest rates, personal service? Go for a credit union. If the credit union offers the products and services you need, then you owe it to yourself to check it out.
Check out the credit unions in your area. Itâ€™s usually easy to join an organization that works with the credit union, so donâ€™t let the membership requirement scare you away.
Have you ever wondered why more people don’t use credit unions? So do we. It’s an awareness issue. Credit unions just don’t usually have the marketing dollars to educate people on the many benefits of using a credit union over a bank.
If you are of the very wealthy variety, however, you probably won’t care too much, because banks will fall all over you to keep you happy. You probably can avoid most of the fees and such if you are a wealthy bank customer.
If you are a small business, see if the local credit unions have business banking accounts. If they do, they typically won’t fee you like a bank would. We’ve found that banks sometimes offer the exact same service as their retail side, but charge a fee for it if it is for a business account.