- You most likely have a choice of credit unions to join.
- Some credit unions require that you belong to a member company or an association to join, others simply require that you live or work in a defined geographic area.
- Credit Unions tend to have significantly higher Customer (member) Satisfaction levels.
- Banks tend to have more financial products and offer the most current technology.
- Banks generally have more branch locations than credit unions.
All You Need to Know
About Banks and Credit Unions
Banks are for profit, generally shareholder owned companies delivering a wide array of financial services to the public at large. Banks are regulated by either the federal government or state regulators, depending on their charter. They are federally insured through the Federal Deposit Insurance Corporation (FDIC). As a for profit organization, their overriding concern is to use their resources as efficiently as possible to maximize earnings. This means that consumers are a means to that end. It does not mean that they do not care about their customers, but it does mean that the first question they must ask is how much income can we extract from our customers without driving those that are profitable to another financial institution.
Credit Unions are not-for-profit organizations offering a wide array of financial services and they are owned by their membership. If you have an account with a credit union, you are a member and an owner. Membership is limited and you must be eligible in order to join. These requirements vary from credit union to credit union. As a member/owner, you have the right to both vote and run for the Board of Directors. You get only one vote regardless of how much money you have at the credit union and all of the directors are volunteers and receive no compensation for their service.
Credit Unions are also regulated by the government, either Federal or State depending on their charter. Credit Unions are also federally insured (with the exception of a very small number of privately insured institutions). The federal insurance program for credit unions is the National Credit Union Share Insurance Fund (NCUSIF).
Credit Unions can and do make excess earnings (profit), however this money belongs to the members, not stockholders or management. This money is used to fund required reserves to ensure a safe and sound financial institution. Most earnings are returned to the members in the form of lower loan rates, higher share deposit rates, fewer fees and better service. Some Credit Unions also return excess earnings to the members in the form of bonus checks during those periods when earnings have out- paced reserve requirements.
Chapter 12 bankruptcy is restricted to people who are family farmers or fisherman. Chapter 15 bankruptcy involves the clearing of international debts. If a city must declare bankruptcy, they file Chapter 9, which is also called municipal bankruptcy.
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