what is the difference between opening a checking account at a credit union and bank?

Answer 1

Here's the real scoop. Do your homework!! Credit Unions are non-profit institutions, however in order to compete with some of the services that a big bank may offer, the money they make is put back into the institution. Some of the ways is offering lower rates on lending products and higher dividend rates on savings and checking products. Also generally the fees are far less at a credit union than a bank.
As far as having your funds protected by the federal government in an unlikely situation of a failure, Credit Union accounts are protected by the NCUA, National Credit Union Administration, up to $100,000. Also many credit unions also carry private insurance for an additional $100,000.
Finally, depending on the size of the credit union, it may be true that smaller credit unions may use a clearinghouse for clearing their drafts, many do use the federal reserve in order to conduct day to day business.

Answer 2

A credit union is not a bank...they are a co-op owned by the members. As a result they are "non profit" (which I believe is bunk, ask any credit union member if they have EVER recieved a dividend check!). They pay no taxes on any money they make, even on the interest they charge or the fees they charge (ie overdraft fees). As a result I personally don't understand how they get away with being "non profit" but that is a discussion for a different day. Credit Unions cannot operate independantly from a bank...They are not allowed to work with the Federal Reserve, so they cannot order funds, process transaction, or clear items on their own...they do all of this thru their related bank...this means that if you come in and make a checking deposit, they will image the work and send that imaged work to a bank (some older credit unions still take all of their work to a bank, they don't even image). Your deposits and funds are not FDIC insured, but I do know they are insured by some insurance the credit union industry has...it is not covered to the extent the FDIC insures your money though.

Here is my personal feeling on the matte...if I have to pay taxes, and I am paying fees and interest...I am going to take my money to the main man, and skip the middle man. At least with a bank I know every time they charge me a fee, they are paying taxes on the money they got from me...at a credit union that is just money in their pockets...I was a credit union member for years and I never saw a dime from them in the way of dividends or anything...and you can't tell me all the money is going to operating costs or that would just be totally inneficiant!

Answer 3

Agree with hottotrot. To the end user, you, there will be very little difference. When opening a checking account, you may want to see if either the bank or credit union charge a fee to withdraw money from other ATMs. Banks tend to have more physical branches and ATMs, so compare the details.

Are they both free checking accounts (no monthly fees) and do they restrict access to your money? Sometimes banks or credit unions only allow a certain # of ATM or branch withdrawls before they charge fees.

Answer 4

very little difference.

At the credit union they may be called share drafts and come through a related bank that the credit union works with.

But the distinctions become less and less every year.

Answer 5

Pretty much the only difference is the interest given and fees charged.