Banks and Credit Unions in the USA

These days with money being a little tighter than usual a person really needs to be careful of where they spend their money and where they keep their money. At some point most people are faced with the question of where to keep their money safe. Unless someone wants to bury their money in mason jars or stuff their mattress, then the idea of banks and credit unions will come up.

The funny thing is that many people do not know the difference between banks and  credit unions. That’s kind of understandable because both banks and credit unions have changed over the years.

Banks whether big or small are for profit corporations that are run by a paid board of directors. Typically they have many branches and through a network of ATMS people are able to access their money all over the country and world. The services of banks include the storing of ones money through a variety of accounts that are insured through the, FDIC, Federal Deposit Insurance Corporation. Through this insurance a person’s money is safe, up to certain amounts, if the bank should fail. Banks also make a variety of loans for personal and business purposes.

Credit unions a non profit organizations that usually are set up to service a certain group of individuals. The board of directors for credit unions are usually made up of volunteers or elected members. The money on deposit at a credit unions is insured through the National Credit Union Association which is similar in task to the FDIC.

There are many differences between banks and credit unions. At a bank one is considered a customer. At a credit union one is a member, because you actually have to join. Since a credit union in a non profit organization the fees on most accounts are much lower than a banks. In past years credit union members sometimes had trouble accessing their money when far from where their credit union is located. These days with a network of ATMS that is not much of a problem any longer.

When it comes to banks and credit unions one needs to understand that the very business practice of a bank is to make money through their fees generated by their services. Since a credit union is a non profit organization. Any money generated first goes to cover the overhead of the operation and any left over profits are given back to the customer in the form of lower fees and interest rates on loans.