Whats the difference bewteen a credit union and a bank?

Question

My coworkers tell me i can get a free account at golden one through my work, but ive always been a member of a bank? Which is better for someone in my situation @ 23 yrs old, making okay income.

between* sorry for the typos

Answer 1

Taken From: http://www.findcu.com

A credit union differs from a traditional financial institution (banks, savings and loan, etc.) in that the members who have accounts in the credit union are the credit union's owners. Since a credit union is a co-operative institution, its policies governing interest rates and other matters are set to benefit the interests of the membership as a whole; for example, credit unions often pay higher dividend (interest) rates on shares (deposits) and charge lower interest on loans. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to remain in business, and this excess is used to expense loan losses and build capital.

Credit unions offer many of the same financial services as banks, including share accounts (savings accounts), share draft (checking) accounts, credit cards, and share term certificates (certificates of deposit).

The for-profit banking industry has a conflicted relationship with credit unions. Bank trade associations are opposed to the tax-free structure on earnings that credit unions enjoy and the American Bankers Association has identified the revocation of credit unions' tax-free benefits as topping its political agenda in 2004 and 2005. However, bank holding companies and their affiliates aggressively compete to provide services to credit unions through their ATM networks, corporate checking accounts, and Certificate of Deposit programs.

Answer 2

With a credit union, the people who deposit money "own" the credit union. Loans are given from those deposits and the interest paid on those loans goes back to the depositors. The "spread" between the interest earned by the CU on loans and interest paid by the CU on deposits is only used to pay the administrative expenses. In the bank scenario the spread has to be bigger because there are owners/stockholders that are in business to make money. So, normally the interest rates at a CU are lower on loans, normally the interest they pay on deposit accounts is about the same as a bank but could be slightly higher. I would keep your account at the bank too, so that if you can't participate at the CU in the event you lose your job (some let you stay some don't), you still have a long term banking reference.

Answer 3

Once you become a member of a credit union (rather than an account through a bank) you will find better interest rates, more reasonable fees in the case of overdrafts or under the limit accounts. You may also find that because it is a "membership" you will get better rates on credit lines of almost any type. Definitely go for the credit union style of managing your money. It is far more personal than the regular banks! Great question by the way for a young individual. It took me to the age of 33 to even question that aspect of financial health and wealth.
Merry Christmas
One suggested CU is Christian Financial Credit Union you can find them easily through your search engine.

Answer 4

On the surface, both look very similar and will most likely offer the same products and services. However, you'll probably find better rates and lower fees at the credit union. Credit unions are member-owned cooperatives; banks are shareholder-owned corporations. Banks have to make a profit from their customers to pay their shareholders, while credit unions don't have to make a profit because their 'customers' are the owners. Check out the credit union. You'll probably like it better.

Answer 5

The difference is that banks are FDIC (Federal Deposit Insurance Corporation) insured and credit unions may use a different insuring agency which may differ from credit union to credit union. Also banks are for-profit organizations owned by private investors and governed by a board of directors chosen by stockholders. Credit Unions are non-profit organizations owned by their members (you, the client). The clients choose a board of directors to govern Credit Unions.

Answer 6

Definitely a credit union is better. CUs exist for their members - a bank exists for profit. That's why CUs offer better rates, usually in all cases, vs. a bank. They can usually a .25-.50% better rate - when saving and borrowing money and usually no minimums or fees on checking accounts.

Answer 7

Credit Unions are usually the best bet because they are owned by their depositors. They will probably offer you a better interest rate on your deposits and any loans you need.
Just make sure they are FDIC insured and that their hours are compatable for you.

Answer 8

technically,i dont know.but i have an account at each option,and i know one thing-theyre a heckuva lot nicer to me @ the credit union!!!!!

Answer 9

Have used CU's for a long time, happily I might add, but you might look into how solid they are .....check CUNA....

Answer 10

I wish i knew