Credit Unions Vs Banks

It's time to say good-bye to banks and hello to credit unions. In the past many people have come to rely on banks for their convenience. Such is true today, for example JP Morgan Chase is almost on every street corner making access to banking easier. According to Jamie Dimon, Chairman & CEO of JP Morgan Chase, they are "nearby and nearly everywhere, 5100 branches and growing" (2011). Although credit unions are small in regards to number of branches, they out number banks with their free full service ATM network nationwide. Credit unions are growing in assets to hundreds of billion dollars. They are also able to offer enticing higher yields on savings. For many customers it may be well worth the inconvenience to become a member of a credit union.

Banks are much larger than credit unions because of their assets and their customer base. They do not need to concern themselves with lowering interest rates, fees or paying the best rate on savings to compete with credit unions. Banks are for profit and are owned by stockholders. They work to make profit for their stockholders and need to be profitable in order to stay afloat. Anyone with funds that meets the qualifying minimum opening deposit is able to join most banks.

Credit Unions on the other hand are not so privileged that anyone can open an account. In order to become a member of a credit union there are guidelines that need to be followed. For example, a qualification can be, worshipping in the community of the credit union, working, or having a family member that is already a member of the credit union. "In general, credit unions charge lower fees and loan rates than banks and pay higher savings yields," says Stephen Brobeck, executive director of the Consumer Federation of America (Trebilcock), (2010). Credit Unions are not for profit, they are owned by their members. "The credit union channels any excess funds back to its members," says Mark Wolff of the Credit Union National Association (CUNA) (Trebilcock), (2010). Whatever excess is made it is returned back to the members, with lower fees, lower interest rates and higher yields on savings.

Banks are required by law to be insured by the Federal Deposit Insurance Corporation (FDIC).

For many years banks have had an edge over credit unions due to consumer's conflicting information regarding the insurability of their funds. Safe deposits boxes were another reason banks were preferred over credit unions, most all banks offer safe deposit boxes and very few credit unions offer safe deposit boxes. Even though, individual accounts are protected up to $250,000, safe deposit boxes are not protected by the FDIC.

Federal Credit Unions are insured by the National Credit Union Association (NCUA). However, if the credit union is not a federal credit union, then it is a state chartered credit union, which could elect to be insured by NCUA or