A person needs to keep their personal and financial life on track. However, it is not something that is counted as exciting. Keeping track of the finances can be very dull at times, and this is precisely why most people avoid dealing with it until all that clutter gets out of control.
According to the experts, there are a few important points that might help you decide whether a credit union is the right choice or not. What is the big deal with a credit union? Are credit unions that different from banks?
The answer to these questions is “yes.” However, a person should never take anyone’s word for it! According to writer Devan Goldstein who works for NerdWallet.
Typically, a bank and a credit union offer a similar type of services like inspection and checking of accounts/savings accounts along with private loans and more. Even though they are mostly similar, yet they have their difference. Credit unions are non-profit organizations, are cheaper to afford as they have better rates and fees, have their customer service centers. In contrast, banks charge a lot more but can offer more advanced products along with up-to-date technology.
So what is the best place to put your cash?
Banks:
- Are “For-profit”
- Have a high rate of fees as compared to their interest rates.
- FDIC will insure up to $250,000 of your funds in a bank.
- Limited emphasis on private interactions.
- Lager banks will have a considerable number of branches spread all across the reign, whereas smaller banks will have a limited number of branches.
- Banks, mainly the large ones, will typically be faster when it comes to rolling out new technological advancements.
Credit unions:
- Credit unions are not-for-profit organizations.
- Often pay higher interest and charge significantly low rates.
- NCUA will ensure up to $250,000 of your funds in a credit union.
- Focus a lot more on personal interactions.
- Credit unions will usually have fewer branches as compared to banks. Nevertheless, some of them contribute to a free branching network that allows their clients to visit physical sites of a partner credit union.
- Even though individual credit unions are tech-savvy, occasionally, they tend to lag behind banks, when it comes to the implementation of new technology.
What Credit Unions and Banks Offer
The National Credit Union Administration backs money in credit unions, while funds in banks are insured by the Federal Deposit Insurance Corp, though the outcome is almost the same; both the organizations will ensure the amount of $250,000 per individual, per possession category. Banks use the broad ATM and branch system; credit unions have cooperative networks of shared branches and ATMs’ as well.
The customer service of credit unions is often better and more responsive. They also offer better interest rates on deposits and lower rates on their loans, along with the lower overall fee.
The Main Difference: What Happens to Profits
So how a credit union organizations works? Banks and credit unions are both similar kinds of financial organizations providing almost comparable services to their customers. However, credit unions are a non-profit organization, while banks are for-profit institutions. This single difference between these two is the foundation for others. When an organization exists mainly to produce a profit, its core procedures will always be organized around generating maximum profits.
A credit union exists to serve people who are stuck in the bond of association, which can be determined by their geographical region, boss, involvement in another association, faith along with other similar factors.
The primary purpose of the credit union is to help the community by providing financial solutions to its associates with the most promising terms that are easy to afford. Unlike banks, a credit union, do not offer accounts to their clients along with large amounts of dividend to a small group of owners. A credit union will instead offer minor dividends with reduced loan rates, fewer fees, and other rewards to a larger group of members. In that sense, a member of the credit union is both client and owner.
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