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| Comparing Credit Unions to Banks |
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| Written by William Blake |
| Thursday, 14 August 2008 08:38 |
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Credit unions certainly have fewer locations and are less common than banks. That doesn't mean that they offer services of a lower quality, though. Consider the advantages offered by credit unions to understand what differences there are between them and traditional banks. 1. Who owns a credit union? A group of investors are the owners of a bank, and as such they are responsible for decisions regarding business policies and administration. These same choices affect the ability of the investors to make money from the investments they have made in the bank. Conversely, credit unions are owned by their members and the decision making board members are volunteers that give of their time on behalf of other members. Still, each member of the credit union can vote on the policy that is to be followed since it will affect their money. 2. Are my funds secured? Banking funds are backed by the full faith and protection of the federal government. The group that insures these funds is the Federal Deposit Insurance Corporation. We've all seen that little FDIC sign on the front window of the bank. Credit union funds are also backed by the full faith and protection of the federal government. Their funds are insured by a different group, the Credit Union National Association or CUNA. 3. Who can join? Anyone who can meet the requirements of the banking institution can open an account there. Banks have a greater reserve of cash at their disposal so they offer incentives to get customers in the door. They call these "loss leaders". If half of the people that come in open an account, then the bank can afford to take a loss on the items that they are giving away for free. Credit unions, however, cannot be joined without first meeting some sort of prerequisite for becoming a customer. These can include factors like religion, workplace, geography, and civic affiliation. By keeping the total number of members low, credit unions can provide better, more personalized customer service. 4. Are they friendly? Banks do what they can to attract new customers, but their real loyalty belongs to the investors in charge of the bank's care. This is why their customer service often waxes at the time you open new account but wanes quickly. Customers of credit unions are also making the business decisions for the company, so the customer service is traditionally better. To keep future interest rates on credit cards and loans low, money that exceeds the running costs of a credit union is used to maintain interest rates on money market accounts, savings accounts, and CD's as high as possible. Offering unsurpassable customer relations skills and interest rates that are just plain better, credit unions are a notable threat to banks. Banks, however, have more money supporting them and are therefore able to offer bigger and better incentives to their customers. Deciding whether to store you money at a bank or credit union involves making an informed decision that relates to your personal situation. About the Author: Wonder whether debt consolidation is the best solution to your debt issues? Visit the Debt Smackdown website for more helpful information at www.DebtSmackdown.com Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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