There are a lot of options out there when it comes to banking and everyone wants your money. From community banks to national banks, there is something for almost everyone. But even if you don’t want to use a bank, most people have the option to turn to a credit union. Both credit unions and banks strive to provide the same basic services, but they are quite different in terms of how they operate and the benefits you might receive.
Banks are typically for profit organizations. Shareholders want the bank to do well so that they can make money. Unless you’re a shareholder, you don’t see any of the profit. With a credit union, they are non-profit entities and are member owned. That means if you’re a member, the savings and potential profit can be passed on to you as dividends.
There are pros and cons to both types of institutions that depend largely on where you live and what kind of services you need. I personally use both a bank and a credit union. We still use the credit union that we were members of when going to college and now qualify as alumni. Our credit union is where we go for loans if possible because the rates are typically better. One drawback is that we moved quite a distance from where we went to college, so there are no local branches. In addition, their online banking features are not very robust. So, that’s why we usually look to them for good rates on auto loans or credit cards instead of checking accounts or online bill pay.
For the bulk of our banking, we stick to a large bank like Chase. We do a lot of stuff online so the great online banking features are very useful and it’s nice having a branch on almost every corner. We don’t have any of our loans through them, but it’s very convenient for day-to-day banking. So, we enjoy some of the benefits of both a bank and a credit union. What about you? Do you stick to one or the other exclusively, use both, or neither?
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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.