Comments on: Banks vs. Credit Unions: Which is Better?

By: Jen

Jen — Fri, 27 May 2011 00:27:07 +0000

As a high school senior about to enter college all I can say is THANK YOU for this information!!! It is easy to understand and super helpful. I currently bank at an institution but will be checking out the credit union in town sometime soon. Thanks again for finally making it (somewhat) easy to understand.

By: Joe

Joe — Thu, 17 Mar 2011 01:08:17 +0000

Jonathan,

This is a fairly good article discussing the benefits of a credit union.

I disagree on one point. If a bank is trying to meet reserve requirements, they don’t want or need more deposits, they want less. At least in the way that most people reading this article will understand deposits, which is in the form of checkable or demand deposits. Bank reserves need to be kept in order to cover 10 percent of demand deposits on a daily basis. If the bank acquired more demand deposits, it would need even more reserves to cover those deposits, thus exacerbating the original problem. The bank needs to keep cash on hand to cover these demand deposits, which cash cannot come from the deposits themselves. The bank could increase borrowing from the Federal Reserve or from other banks in order to maintain the amount of required reserves. The point to getting more demand deposits is that it gives the bank more money with which to make loans.

Overall this is a fairly good article discussing the positive aspects of credit unions while not discussing any of the drawbacks, and not discussing any of the “things which banks are better suited for.” I would love to see another article pointing out the other half of the title of this article. Namely, the downside to credit unions and the positives to banks.

By: Daniel

Daniel — Mon, 21 Feb 2011 04:22:13 +0000

Well, I’ve been with CU’s ever since I started, so I personally cannot talk them down. But fact of the matter is, every complaint I’ve ever heard from my friends were in fact “bank customers.” I had a friend who was a Wells fargo customer, he set his debit card to “decline” upon lack of funds. Somewhere along the line though (I’m assuming since shareholders have a big call in all bank matters) this was changed, at that point he incurred over 500 dollars in overdraft fees! When he called they told him he was shit out of luck. Granted banks have their so called “pros,” but thus far I’ve seen the con’s cause more grief than the pros could ever make up for! All in all, lower tier to middle tier workers can always rely on CU’s, but the big banks clearly rely on the highest tier money makers to keep them going!

Dan

By: Kristy

Kristy — Wed, 15 Apr 2009 05:00:15 +0000

@ Ned – I’m not disagreeing with you, but the fact remains that even at your small community bank, you’re still for-profit. Therefore, fees are a major source of income for your bank. You may not abuse it to the extent that the larger banks do – case in point, take a look at Bank of America’s new fee structure – but fee income is still a large part of the equation for you. I do happen to agree that community banks are better than big banks any day, though!

By: Ned

Ned — Wed, 15 Apr 2009 01:13:43 +0000

Now don’t throw all the banks in one big fee encrusted greedy box. Having worked for primarily small, community based banks I can say that there is a big difference between the small and large banks. Small community banks are typically owned by members of the community (local shareholders and employees) and are founded by people that have invested their lives and their money.
Their fee structure is comparatively lower than most. In most cases, customers know their branch management by name and decisions about fees and loans are still made by people and not completely dictated by some company policy. At my bank, a lot of the customers know the CEO by name and have his phone number. Loan decisions are made on a case by case basis in front of a committee. Not a machine with a scoring matrix. When we invest the funds on deposit wisely, we can afford to give the excess back to our customers and our employees through higher deposit rates, lower loan rates and better salaries.

Now, I am not trying to sell banks to credit unions or vice versa. Just making a distinction. I have absolutely nothing against credit unions and (shock) I actually belong to one and love it. I have found that credit unions are similar in many ways to small banks. Because they generally strive for the same things. Better service, convenience, luring customers away from the big fee banks and growing their customer bases.

In summary, if you want to go where everyone knows your name, speak with someone that will WANT to HELP you and don’t want to get killed with fees, go to a credit union or a community bank.

By: Bryan @ Frugal Logic

Bryan @ Frugal Logic — Mon, 19 Jan 2009 10:25:42 +0000

My Credit Union is so much better than the bank that I used to have my accounts with.

It is so nice ringing them up and having the person that answers the call be able to handle pretty much any query I have. With my old bank I used to get bounced around different departments before I could get what I wanted.

The Credit Union fees are also amazingly low. Big banks try to charge fees for anything they can think of.

Our mortgage rate was also significantly lower than any of the big banks when we applied for our loan (I haven’t actually compared recently though).

I also feel they will always try and do the right thing by me, rather than trying to maximize their profits and that’s a nice feeling to have.

By: Kristy

Kristy — Tue, 30 Sep 2008 02:12:17 +0000

I’m not trying to sell anything, I’m giving my opinion based on the fact that I’ve worked at both banks and credit unions. I think credit unions are better. I agree both have their faults and service is dependent on the employee, but typically, walking into a credit union you do get better service because there is less pressure to sell than there is in the bigger banks. There it’s all about numbers. However, I also said that the bigger banks serve their purpose too.

But, here’s another way to look at it. The NCUA – which is who insures credit unions – isn’t anywhere near insolvent. In fact, there aren’t too many credit unions that shut down for poor choices, or are seized and control giving to another credit union. The FDIC is going to have to start borrowing from the Fed in order to cover the deposit requirements it needs to meet. Fortunately, they were able to get Chase and Citigroup to take over WaMu and Wachovia respectively, but the point is, banks are far from being done with their failures. There will be more to come. So, in my professional opinion, credit unions are better. Take it or leave it.

By: nathan

nathan — Mon, 29 Sep 2008 21:57:52 +0000

If credit unions were so much better then everybody would be using them instead of banks. Fact is their not. That would be the answer to which you should use. Whoever said credit unions offer better service is just a salesman making a sales pitch and I’m certainly not dumb enough to buy what you’re selling. The service depends on the employee, not the branch.

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