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Bank or credit union: Which is right for you?

CHARLOTTE, N.C. — According to the Charlotte Area Chamber of Commerce, Charlotte lost bank branches from 2011 to 2014, but added credit unions in the same time period.

While many people are familiar with banks, they don't know much about credit unions so Action 9 investigator Jason Stoogenke looked into how people decide which is right for them.

For profit vs. not for profit

Banks typically are for profit businesses that answer to shareholders as well as customers.  Credit unions usually are not for profit organizations that answer to members and often have restrictions on who can join (e.g., based on where they live or work).

Both federally insured

Everyone's money is safe in both.  Banks and credit unions are both federally insured, just by different agencies.

Banks: “Convenience, consistency, innovation”

Banks tend to offer convenience and more choices.  They typically have more branches, ATMs, online sevices, types of accounts, credit cards, and loans.  For example, the website MoneyCrashers.com said, "Bank of America currently offers five different types of checking and savings accounts, 29 different credit cards and a host of loan and investment products.

In comparison, the credit union where I live offers only two types of checking and savings accounts, two credit cards, one mortgage loan, one personal loan, and one auto loan."

Wells Fargo says, “It provides banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations and 13,000 ATMs, the internet and mobile banking.”

"Convenience factor, consistency of execution, product and technology innovation, staying on the front edge and driving the industry, where the consumer wants us to be," Wells Fargo executive vice president Kendall Alley said.

But some credit unions offer more than someone might expect, like North Carolina State Employees' Credit Union (SECU), the second largest credit union in the country.  It offers all of the following financial services:

North Carolina State Employees’ Credit Union (SECU) offers

Several account options:

Share (saving account)

FAT CAT Share (ages 0-12)

Zard Share (ages 13-19)

Money Market Share

Individual Retirement Accounts (Roth, Traditional and SEP)

Share Term Certificates (available in 6, 12, 18, 24, 30, 36, 48 and 60 month terms)

Coverdell Education Savings Account (CESA)

Holiday Cash Club Account (for holiday saving)

Summer Cash Account (for public school/community college/university employees not paid on a 12-month basis)

Health Savings Account (HSA)

SALO Cash Account (share account opened in conjunction with Salary Advance Loan)

CashPoints Global (controlled spending account with electronic-only access through a CPG card)

Dividend Checking

Zard Checking (for teens 13-19)

Loans:

Vehicle Loans (new and used)

Mortgages (adjustable and fixed rate, including special mortgage programs such as First Time Homebuyer's mortgage, Manufactured Home loans, and Construction-Permanent mortgage)

Home Equity Line of Credit

Open-End Signature Loan

Share Secured Loan

Term Notes

Salary Advance Loan

Visa Credit Card

Credit Unions:  "Our mission is totally different”

Credit unions tend to pride themselves on relationships, better interest rates on accounts and loans, and fewer fees. Truliant Federal Credit Union president Marc Schaefer said, "Our mission is totally different from the banking industry in the sense that we exist to improve our members' lives.  It's a financial cooperative owned by the members," he said.

Summary

So if someone travels often, does business in multiple states, or values name recognition, they may prefer a traditional bank.  If they're just looking to have a basic account, deposit checks, pay bills, or take out a common loan, they may want to consider a credit union but not always. Everyone should compare for themselves.

For more information on the differences between banks and credit unions, check out the recent Consumer Reports article

Other Action 9 headlines: 

WSOC

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