Choosing between a bank and a credit union involves some tradeoffs. Credit unions generally provide better customer service than banks do, though the ratings for smaller banks are nearly as good. Credit unions also offer higher interest rates on deposits and lower rates on loans.
Why are credit unions safer than banks? Like banks, which are federally insured by the FDIC, credit unions are insured by the NCUA, making them just as safe as banks. ... The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their single ownership accounts.
Savings offerings may be limited and yield less. Usually credit unions keep their overhead low so they can pay members higher interest rates on deposits. But some credit unions may still have lower yields than banks along with fewer savings and money market account choices, Epps says.
The Cons of Credit Union Membership
Easier Approval
In general, credit unions are more likely to lend to people with poor credit scores and offer options for smaller down payments. Credit unions are also more likely to hold onto the mortgages they originate, rather than selling them like banks often do.
How Do You Switch From a Bank to a Credit Union?
The main reason most people pick credit unions over banks, however, is because of the interest rates. ... Because credit unions have lower operating fees and they are not concerned with paying dividends at the end of the year, they don't inflate interest rates to make more profit.
Credit Unions And Banks Are Insured
The biggest reason to leave your money in a credit union or bank is simple—they are insured. All credit unions are insured by the NCUA up to $250,000, while banks are insured by the FDIC for the same amount.
If your federally-insured credit union fails and the entire pool of money in the NCUSIF is exhausted, the U.S. government promises to come up with any funds needed to replace your savings. ... FDIC and NCUSIF insurance both provide up to $250,000 of coverage per depositor per institution.
Credit unions typically charge fewer fees than banks, and the fees they do charge are far lower than what you'd pay at a bank. Also, they typically charge lower rates for loans and pay higher rates on savings. ... Members, not outside stockholders, decide how their credit union is run and who runs it.
Credit unions are more likely to work with a member on a small loan, even if that member has a poor credit rating. These are usually referred to as “credit builder loans” and can really help those with bad or no credit get a leg up on building their credit.
Founded in 1947, Navy Federal Credit Union is the largest credit union operating out of the state of Virginia and the largest in the United States. This credit union provides banking services to over 9.44 million members.
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