How to Compare Banks With Credit Unions

There are several facets involved in taking control of your finances. One aspect is taking an active role in deciding what type of financial institution to use. If you compare Banks and Credit Unions, you'll discover that both are capable entities, but with some important differences. Make an informed choice. Compare financial institutions before deciding where to invest your assets.

Difficulty: Moderately Easy

Instructions

1. Understand who's in charge. Banks are for-profit institutions who answer to stockholders and a paid Board of Directors. Credit Unions are non-profit organizations, owned and democratically controlled by the membership. Membership elects Credit Union Board Members from their membership and Board Members work in a voluntary capacity.

2. Follow the dividends. Surplus earnings, (funds beyond expenses and required reserves), are returned to Bank investors. Credit Unions typically use this funding to reduce loan rates and offer low-cost member services, as well as returning a small portion to the members in dividend form.

3. Know who secures your funds. The Federal Deposit Insurance Corporation (FDIC) insures banks. The U.S. government covers losses. The National Credit Union Share Insurance Fund (NCUSIF) insures most Credit Unions. NCUSIF is the only deposit insurance fund of its kind. It utilizes a pay-as-you-go system, which virtually eliminates losses.

4. Decide how you want your voice heard by your Bank or Credit Union. Members who have voting capabilities own Credit Unions. Banks welcome customer suggestions and concerns. Banks pass on the concerns to the voting stockholders and the Board of Directors.

5. Compare fees and services of local Banks and Credit Unions. Similar entities can cater to entirely different types of customers, so take the time to check them all. Find the institution that meets your requirements, and confidently invest in your future.