Hi, What is the difference between a Bank and a Credit Union? I want to..?

Question

I want to open up a savings acount and I heard a lot of good things about credit unions but I'm still a little confused.

Answer 1

The differences back in the 1970s were huge -- banks could have checking accounts -- but couldn't pay interest on them. Credit unions and S&Ls could pay high rates on deposit accounts -- but couldn't have checking accounts.

But laws changed in the 1980s -- and the differences between them have nearly disappeared. There are still some differences (like which government agency oversees them, or who is allowed to join a credit union, or who owns it) -- but they are things depositors don't really need to worry about.

Your deposits in a credit union won't be guaranteed by the FDIC -- but will be guaranteed. There may be restrictions on which credit unions you can join. But go ahead & feel safe in going to a credit union.

Answer 2

The difference is the ownership of the organization with banks generally owned by stockholders and credit unions owned by "the members". With legislation from the 1990s, the banks can now act with much more freedom and offer a much more vast depth of services as you grow in your life. However, investment firms can now also act more like banks, and offer far superior returns. A credit union generally cannot help you invest, and generally cannot help you start or finance a business. If you want to "save" - do a money market with an investment firm earning 4.5% rather than a lousy savings account with 0.5%-1%. Suggest someone like Edward Jones for a new investor or Merrill for a more sophisticated investor.

Answer 3

A credit union is a bank, but you have to be a member of the particular goup that the credit union caters. Each CU has a different requirement for membership. (i.e being a teacher, government employee, live in a certain community etc...). Being a member in turn gives you priveledges of getting generally better rates on savings and lower rates on loans. They refer to you as a member, not a customer.