Since I landed my first job at age 15, I have been with the same bank. It is a credit union open only to residents of Washington State and I love the perks it gives us. When my husband and I got married, we decided to go with my bank for our checking and savings account because the benefits of this bank far outweighed the benefits of his bank (which was also a credit union...
I’m sorry, but I just have to point out the oxymoron in the first two sentences of this article (And the third, and the fourth). Credit unions are not banks. I’m sure you knew that, and just made a mistake, right?
Cheers!
OK, someone who is more familiar with these terms please chime in and clear this up. I always assumed that a credit union was a type of bank. As in, “a credit union is part of the US banking system” So a credit union is a bank.
Bank -noun: an institution for receiving, lending, exchanging, and safeguarding money and, in some cases, issuing notes and transacting other financial business.
That is the definition I found in my dictionary which would mean that a credit union is a kind of bank
Wikipedia has a good explanation:
A credit union is a cooperative financial institution that is privately owned and controlled by its members. Credit unions differ from banks and other financial institutions in that the members who have accounts in the credit union are the owners of the credit union and they elect their board of directors in a democratic one person-one vote system regardless of the amount of money invested in the credit union.
Also:
Credit unions maintain that no matter their size or field of membership, the fact that they are owned by their members and not shareholders makes them fundamentally different from banks.
The Fed also offers an explanation at http://www.federalreserve.gov/generalinfo/faq/faqbkinfo.htm#11
I think it depends on how you view the term: whether you are taking it literally or as a general term of all financial institutions. Kind of like Kleenex is a generic term for all tissue paper and another brand isn’t Kleenex, but Kleenex is often used as referring to all tissue paper.
The author did make is a bit confusing and could have done a better job of explaining that part.
Hey Cortni, I think we conduct our financial business at the same credit union!
The important difference is that credit unions are not FDIC insured, whereas banks are. Usually credit unions are insured by some other organization, but it’s not federal.
Credit unions are just as insured. Their insurance comes from the Nation Credit Union Administration, an arm of the federal government. You can check out more on that here.
A credit union is not a bank.
It is an ogranization that does provide some banking services, but the legal and tax setups are very different. Banks don’t really like credit unions because banks are taxed much more severely than credit unions (quite honestly, I wouldn’t be surprised to see credit unions disappear in the next decade or two due to lobbying from banks).
What is a Credit Union? A credit union is a nonprofit co-op organization that offers banking and financial services to a specific group (and only that group!).
While an earlier commentor was correct that the FDIC does not insured credit unions (only banks), all federally-chartered credit unions are insured by an entity equal to the FDIC called the NCUA (National Credit Union Administration).
NCUA is a federal agency that oversees, charters, and “backs up” FEDERAL credit unions (not necessarily state-chartered credit unions) through the National Credit Union Share Insurance Fund (NCUSIF), a federal fund backed by the full faith and credit of the United States government.
If a credit union is only chartered by a state, its oversite and guarantee fund would be up to your local legislators’ infinte wisdom.
I was a happy credit union member for many year. Unfortunately, I ran into a couple of problems that sent me to a regular bank. One was the lack of online account information and bill paying. I love online bill pay (now that I’ve tried it, I’d never live without it), and the main reason I left my credit union was that they had a very limited web site that didn’t offer it. (Even account information was often weeks behind.) This was a few years ago, so I hope credit unions have moved with the times and now offer this kind of service.
ATM access was another issue. I managed to work around that, but it was a hassle when traveling or when I was away from home. It became very hard to find ATM’s that didn’t charge an extra fee. One “out of network” fee would easily wipe out any interest I’d earned for that month in my checking account.
Credit unions differ from banks in that they exist to promote the thrift and financial well-being of their members. Banks exist to produce a profit for shareholders. Banks don’t care about their customers, only how much money they can drain out of your pocket and put into theirs. Ture, some credit unions have lost sight of the thrift mentality, pushing unnecessary loans and credit on people and acting just like banks; however, these are the minority. The majority are genuinely concerned about their members’ financial status, and offer many resources for those who sincerely want to “get their money right.”
Because of this, most credit unions passed on subprime or exotic mortgages, and as a result, the entire industry will emerge from this subprime mess smelling like a rose. Bankers are trying to eliminate credit unions so people don’t have a say in what happens to their money. Without credit unions, banks can charge whatever the hell they want and make whatever rules they want. Credit unions keep them honest, and remind people that banks DON’T have to control our lives – WE control our lives. Thanks for the great blog post – GO CREDIT UNIONS!
Karen, I am sorry that you felt the need to look for solutions at a bank instead of seeking out another credit union that would meet your needs.
My credit union has online banking with access to all of my information. I even have it set up to send me a notice when my balance gets low so I don’t have to pay overdraft fees. It has a great website that provides lots of information. They are a part of the shared branching network that allows me to access my funds by talking to a real person at any one of the 4,000 other credit union branch locations in 46 states. They can do this because credit unions are not only cooperatives but they cooperate with each other. They are also apart of what is called the Co-op, which is a network of surcharge free ATMs – 25,000 ATMs nation wide. I can get cash where ever I go. They also post my deposits the same day so I have immediate access to the funds and start earning interest on my savings the day I put it in.
Just to clear up one more misconception – they are a state chartered credit union AND are insured by the NCUA. Only a small number of credit unions do not have this type of insurance backing them up.
If my credit union ever failed to meet my needs, I certainly would see if there was another one that could. I am much more interested in giving my business to someone who is looking out after me rather than some investor across the country or around the world.
I’ve worked in both the banking industry and in the Credit Union industry. I can tell you without a doubt there is 100% difference between Banks and Credit Unions. Banks try to make as much money for their owners as possible – the shareholders – which are typically not the customers of the bank. Credit Unions are owned by each and every person who has an account so if the Credit Union makes money; those profits are returned to the members of the Credit Union in the form of lower loan product rates, higher savings products rates and sometimes even ‘cash back’. Big difference is that banks are For-Profit and Credit Unions are Not-For-Profit. Credit Unions are for the ‘normal’ people who have accounts there and banks are for the rich people who own the bank – plain and simple. In my opinion, everyone should belong to a Credit Union. Why? If the institution makes money, who should it go to – that fat cats who own the institution or all the people who belong to that institution who allowed the institution to make all that money? I’m not the smartest person in the world but this decision is a no-brainer.
Even the ‘motto’ of Credit Unions tells the story – “People helping people”.
Nice! I love my credit union, too. But, it’s “Ten Reasons I Love Our Credit Union.” As the New York Time told me when I corrected them, placing the word “why” after a form of the word “reason” is “sloppy construction.”
Here’s hoping that either you have no pet peeves or that yours are not as ubiquitous as this one of mine
And so I’m not just picking on the OP: Tanya – excellent response, by the way – it’s “wherever,” not “where ever.”