Thursday, July 8, 2010

Credit Unions or Banks? Are they the Same? Whats the Difference?

So I was out with a girl the other night. It is our second date. We were talking and some how the term bank and credit union came up. She didn't know the difference.

Know the difference between credit unions and banks. Please.

Well to save the very few others who don't know here is the scoop...

Credit Unions

  • Nonprofit Organizations
  • Owned by the members (customers)
  • Board of Directors call the shots and they are volunters (though nothing is free)
  • Profits are driven back into the banks costfunctions and thus yield discounts for the members in the form of lower interest rates, smaller fees, and whatever.

  • For Profit Organizations
  • Owned by Shareholders
  • Board of Directors call the shots and they are paid. They are paid to make profit for share holders
  • Profits are either invested into bank or paid to shareholders

To put all this in perspective...

Banks are generally going to be more innovative, motivated, and hire better talent.

Banks are going to try and take as much money from you as possible with out losing you.

Customers of banks potentially will feel less attached or as motivated to pay up, though these margins are so slight that they may not even matter.

Credit Unions are going to be a little old fashioned and do as it is done and has been done.

Credit unions are going to try and keep rates as low as possible. They want to keep costs down.

Credit Unions will have good people working but these are not gona be the change the world type for the most part.

Members (customers) may potentially have a stronger sense of duty, responsibility, and loyalty.

The Bottom Line Round

Go with a Credit Union over a Bank. Or not what do I care.