by RateSeer Staff

Daily Banking - Credit Union vs a Bank

Daily Banking Series - Credit Union vs a Bank

In our daily banking series we'll to explore the similarities, differences and pros and cons of a Credit Union (CU) versus a Bank.

Are Banks and Credit Unions the same?

Credit Unions are similar to Banks because they both offer a broad range of financial products including checking and savings accounts, CDs and loan products such as mortgages and credit cards. The main difference between a Credit Union and a Bank is how they are owned and operated. Credit Unions are cooperatives, owned and operated by their members as a not-for-profit institution. Banks are owned by investors and stockholders and are definitely for-profit corporations.

Because Credit Unions are not-for-profit their earnings are paid back to their members in a number of ways including higher savings rates and lower loan rates. Banks earnings are paid to their stockholders (only) through dividends.

Membership and Account Opening

To join a Credit Union the potential member must meet the membership requirements of the Credit Union which varies dependent on the CU's objective. Membership eligibility is sometimes based on geographical location (members must live and/ or worship within a certain area), or, on the potential members' employer such as the Pentagon Federal Credit Union, which specializes in servicing members of the military and their families. If membership requirements are met an application is filled out and submitted. The majority of Credit Unions offer both online and in-branch applications and require a minimum of a $5.00 deposit to become a member.

To open an account with a Bank two forms of ID are required as well as proof of address and a minimum opening deposit. The minimum opening deposit ranges between $25.00 and $100.00. Most Banks offer online and in-branch applications.

Deposit Insurance

Banks and Credit Unions offer deposit insurance to protect depositors from losses due to institutional insolvency.

The National Credit Union Administration, or NCUA, is an independent federal agency that was created to regulate, charter and supervise federal credit unions.  The NCUA operates and manages the National Credit Union Share Insurance Fund which insures the deposits of account holders in federal credit unions and the majority of state-chartered credit unions.

The Federal Deposit Insurance Corporation, or FDIC, is a U.S. government corporation that provides deposit insurance for depositors to US Banks.

We'll delve into Bank and Credit Union fees, the convenience factor and online-only banks in our next article.

by RateSeer Staff

RateSeer Technologies

Think about how much information hits you every day. Email, text messages, social media news sites, notifications…never in human history have we had to process as much information as we do now. How do we process it all? Never mind processing. How do we see it all? Or rather, how do we see only what we need to see?

by RateSeer Staff

Local Banking

Does local banking make sense for you?

Community banks and credit unions are often locally controlled and operated, they work within established localities and typically reinvest depositors' money into local businesses, farms, and individuals.

In this Letter to the Editor posted on MyrtleBeach online, the impact of local banking is explored.

by RateSeer Staff

Mortgage Pre-Approval

Most mortgage professionals will tell you that when looking for a house, you should begin by speaking with a lender first to secure a mortgage pre-approval. Pre-approval from your bank or credit union is a powerful tool when house hunting, and,it is easier to shop for a property when you know how much you have to spend.