Banks and credit unions are both financial institutions although they offer similar services there are several things different about them. Both the banks and the credit unions offer checking and savings accounts along with auto loans and mortgages. The main difference between a bank and a credit union is that customers of a credit union are actually members and they own the institution. A bank is a company that aims to maximize profits for its shareholders. While a credit union is a cooperative and often not for profit institution that is owned by its members or customers who democratically elected board of directors however credit unions tend to focus on members needs and attempt to provide credit at reasonable rates. There are pros and cons to participating in either a bank or a credit union. The staff at Sugar Land Chiropractors has considered the differences between a bank and credit union.
A bank is owned by its shareholders and a credit union is owned by its members. A bank aims to make a profit for shareholders while the credit unions are not for profit. Any money left over after expenses and reserves within a credit union is passed back to the customers or the members in the form of lower fees, lower loans rates, higher deposit yields and free services. Members of the staff at Sugar Land Chiropractors appreciate the lower fees offered by a credit union. There are several types of banks such as commercial banks, community banks, community development banks, savings banks, postal banks, savings banks and private banks. There are two basic types of credit unions the consumer credit union and the corporate credit unions.
The history of banks and credit unions vary. Letters of credit used in the 3rd century were found and information on Muslims use banking services in the 9th century was located. The 12th century archaeology finds includes checks. Credit unions are relatively newer as compared to banks because the earliest known evidence of their existence is in 1852. It is considered quite amazing by the Sugar Land Chiropractors staff that the history of banks and credit unions can be traced so far back in time.
Ownership of banks and credit unions differ. This is the biggest difference between the banks and the credit unions. Originally and as it is still the case in some countries banks were institutions established by state or national government for lending and borrowing purposes. Gradually the banks were privatized and came to be owned by shareholders who invested in them. Credit unions are owned by their customers, the people who maintain accounts with them. members of a credit union elect the institutions board of directors on a one person, one vote system. The staff at Sugar Land Chiropractors appreciate the fact that credit unions are actually owned by members. The basic principle behind operating a credit union is to maintain capital solvency. Many cases credit unions do not operate to earn profits they only operate to support their owners financially and reward them with lower interest rates another purse is generated revenues are high.
Sugar Land Chiropractors | Banks VS Credit Unions
There are profit motives by banks whereby credit unions are not for profit driven. Banks operate purely on a profit motive they want to make money for shareholders. Most banks are required to profit from their daily activities in order to survive. The staff at Sugar Land Chiropractors understand that banks are for profit. They earned their profit by charging interest and fees on most financial services, including credit cards and loans. Credit unions are usually not for profit institutions. These organizations do not function to earn a profit from their daily activities. Credit unions are not nonprofits as they do not have some net income to remain solvent routine capital instead, they refer to how credit unions operate in regard to earnings.
Many people are concerned about the solvency of their financial institution. The question they have is whether their deposits are safe in the event that the bank loses money on its investments in lending operations. The Federal Deposit Insurance Corporation or also known as FDIC is a government organization that provides insurance on deposits being held at banks. The FDIC provides insurance up to $250,000 per depositor per bank. A bank needs to be an FDIC member in order to for deposits into that bank to be insured. Just like FDI C insures deposits in banks, the national credit union share insurance fund which is backed by the government insures deposits in credit unions up to 250,000 in individual accounts. This insurance applies to accounts at those credit unions that are members of the Credit Union National Association also known as CUNA. The staff at Sugar Land Chiropractors understand the necessity of insuring the customer accounts.
Popularity of the banks and credit unions. As of December 2013, there were just under 6900 FDIC insured banks in the US. In the fall of 2011 several banks including Bank of America Wells Fargo chase and Citibank announced they were begin charging fees for debit card use. Falling substantially negative feedback they retreated from the proposal. However, the credit union National Association reported that 650,000 joined credit unions falling Bank of America’s announcement of its $5 monthly debit feet in September of 2011. A grassroots moments bank transfer died with loss on Facebook in 2011 in response to such fees. It urged consumers to switch from large banks to smaller local financial institutions by November the 5th 2011 the movement was fairly successful gardening over 440,000 lights in less than two months.
The pros and cons of banks and credit unions are important to understand. It is important for the staff at Sugar Land to understand the pros and cons of banks versus credit unions. While credit unions ownership structure may seem very appealing there’s no clear winner in the bank versus credit union debate. There are advantages and its advantages to both. Because credit unions directly depend on their members, customer service experience at the institutions tend to be good. Smaller banks were more likely to receive higher customer satisfaction right beans then beat bites like Bank of America which scored 66. The customer service at both banks and credit unions is important to the staff at Sugar Land Chiropractors. In general credit unions offer higher interest on savings account and lower interest rates and fees on loans. However, dealing with large loans such as mortgages or other loans it is wise to check around for the best rates. Some large banks will compete against credit unions by matching or even beating their interest rates. Individual independent small lenders that specialize in mortgages are likely to offer better rates in both the credit unions and the banks but usually end up selling their mortgages to larger banks within months.