Is it better to join a bank or a credit union?
Credit unions tend to have lower interest rates for loans and lower fees. Banks often have more branches and ATMs nationwide. Many credit unions have shared branches and surcharge-free ATMs provided through the CO-OP Shared Branch network. Bank have historically had better technology online and for mobile apps.
Advantages of credit unions
Credit unions typically provide better savings and lending rates, van Faassen says. NCUA insurance: Federally insured credit unions are backed by the U.S. government. Your money is safe if a credit union fails.
The downside of credit unions include: the eligibility requirements for membership and the payment of a member fee, fewer products and services and limited branches and ATM's. If the benefits outweigh the downsides, then joining a credit union might be the right thing for you.
However, because credit unions serve mostly individuals and small businesses (rather than large investors) and are known to take fewer risks, credit unions are generally viewed as safer than banks in the event of a collapse. Regardless, both types of financial institutions are equally protected.
Credit unions are member-centric, community-minded places to work. Numerica is interested in investing in its employees to help them live well. While working at a credit union, you improve the well-being of your friends and neighbors. You know how to find jobs and apply at Numerica.
Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.
Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money. Both credit unions and banks have deposit insurance and are generally safe places for your money.
Experts told us that credit unions do fail, like banks (which are also generally safe), but rarely. And deposits up to $250,000 at federally insured credit unions are guaranteed, just as they are at banks.
Higher returns, better savings, low interest on borrowings, and a sense of community – these are just a few of the benefits of credit union membership.
A bank or credit union may make a soft inquiry on your credit when you open a new checking account to check for a history of fraud. These soft checks do not affect your credit score. However, in some cases, a bank may perform a hard credit check, which does affect your credit score.
Which is safer FDIC or NCUA?
One of the only differences between NCUA and FDIC coverage is that the FDIC will also insure cashier's checks and money orders. Otherwise, banks and credit unions are equally protected, and your deposit accounts are safe with either option.
However, two regulatory experts say credit unions are actually safer places for folks to put their money than traditional banks, pointing to how the institutions – which largely cater to individuals rather than companies – are much less vulnerable to bank runs or liquidity issues.
National Credit Union Administration (NCUA) credit unions had seven conservatorships/liquidations in 2022 and two so far in 2023. While credit unions have experienced several failures in 2022, there were no Federal Deposit Insurance Corp.
If you want higher deposit rates and don't need access to branches across the country, for example, you might prefer a credit union. If you want access to in-person services and don't mind lower interest rates, a bank might be more suitable.
- Best overall: Alliant Credit Union.
- Runner-up: PenFed Credit Union.
- Best for high APY: Consumers Credit Union (CCU)
- Best for low-interest credit cards: First Tech Federal Credit Union.
- Best for military members: Navy Federal Credit Union.
But compared to banks, credit unions tend to be smaller, operate regionally and are not-for-profit. In many instances, they offer lower rates on loans, charge fewer fees and offer better interest rates for deposit accounts than traditional banks.
- Mobile Banking Might Be Limited or Unavailable. ...
- Fees Might Not Be as Low as You Think. ...
- Credit Card Rewards Might Be Limited. ...
- ATMs and Branches Might Not Be Convenient.
- The funds received from the commercial banks are of short duration and the procedure of obtaining funds is a time taking affair as there is a lot of verification that needs to be done from the bank end.
- The bank can set difficult conditions for granting of loans.
The main benefits of a credit union vs. a bank are that credit unions tend to offer better rates and customer service, lower fees, and a national network of ATMs. However, a bank may offer more branches and products than a credit union.
Your money is safe in a bank with FDIC insurance. A bank account is typically the safest place for your cash, since banks can be insured by the Federal Deposit Insurance Corp. up to $250,000 per depositor, per insured institution, per ownership category.
What happens if credit union fails?
The credit union can resolve its operational problems and be returned to member ownership; The credit union can merge with another credit union; or. The NCUA can liquidate the credit union.
- Membership Restrictions. In the past, membership in a credit union was far stricter. ...
- Limited Locations. In many towns, credit unions may only have one or two physical branches. ...
- Fewer Services. Certain services found at banks are not always available through a local credit union.
Cons of credit unions
Limited access: Credit unions usually serve a specific community or region, resulting in fewer branches and ATM access. Fewer product options: While credit unions offer many of the same products as banks, you may not have as many options for each as you would with a bank.
| Bank | Forbes Advisor Rating | Products |
|---|---|---|
| Chase Bank | 5.0 | Checking, Savings, CDs |
| Bank of America | 4.2 | Checking, Savings, CDs |
| Wells Fargo Bank | 4.0 | Savings, checking, money market accounts, CDs |
| Citi® | 4.0 | Checking, savings, CDs |
How Revenue Must Shift at $10 Billion. When a credit union reaches $10 billion in assets, the Durbin amendment of the Dodd Frank Wall Street Reform and Consumer Protection Act also kicks in. This amendment reduces the amount of interchange income a financial institution may collect on debit and credit card transactions ...
