two of the largest places of people choose to put their greenbacks are banks and credit unions, but how do you know which option is you? While banks and credit unions offer many of the same services, there are distinct differences in how they conduct their business.
who's the boss?
among the biggest differences between banks and credit unions is in the property. The banks are owned in large part by the shareholders who have invested in the Bank. On the other hand, credit unions are financial cooperatives owned by their members. Once you join a credit union, you're a co-owner.
which benefits?
because of the stark differences in the property, the objectives of the credit unions and banks are different. Banks are designed to satisfy their shareholders by producing a profit through their company. Their profits are made by means of interest rates, loans and fees. Credit unions, however, are non-profit cooperatives.
pros and cons of
credit Unionone of the biggest pros to belong to a Credit Union is the potential benefits they accumulate are redistributed to members of the union, usually in the form of benefits, such as favourable interest rates and the lack of minimum-balance requirements.
in addition, given that the members are a group of collective property themselves, they are able to have their say in the decision-making process and the operations of the Fund. Several times, the Board of Directors of the Fund is made up of colleagues in the union who actually volunteered to serve as members of the Board of Directors. Caisse members often have one connection to another, be it a workplace or a regional association. Therefore, several credit unions are also active in their communities.
while the caisses populaires have many desirable features, they also have their drawbacks. One of the biggest drawbacks to credit unions is that they can be difficult to access to credit unions tend to be more rigid with their approval as the banks. Also, members of the credit union who have credit cards may be disappointed by the lack of rewards to those who make payments in accordance with.
pros and cons of banks
, one of the biggest reasons that people choose to banks on credit unions is the convenience. More big banks like Chase, Comerica and Bank of America have branches and ATMs all over the country. This can come into play, if you're looking to avoid frequent ATM fees. In addition, members of the banks, traditionally able to take advantage of their banking experience more options than members of credit unions. Banking online services and transfer of funds via an iPhone or Android have become central parts of banking experience. Several credit unions have not yet adopted this technology on-the-go.
the large number of fees that go with the Bank remains one of the biggest drawbacks. Some of the many rights they take often include minimum balance fees, filing fees and foreign transaction fees. These could add up quickly and can often take customers by surprise. Another drawback to go with a traditional bank is that customers may be subject to low rates of interest on higher savings and loan and credit card accounts. Banks need the money at the end of the day, so APRs can be higher when you do business with them. Why, when you make a big purchase like a car, it is often advantageous to obtain a loan through the Credit Union.
banks and unions are good options, and whatever that you select will probably depend on the benefits and the drawbacks are the most relevant to your situation.
we would like to know your opinion. Which route is better? Share your opinions in the comment section below and then check out our tips to choose the right bank.