Which is better a credit union or a bank?
The credit unions vs. banks’ controversy are easy to solve if you take a step back and look at the economic incentives. First, as yourself what is the purpose of a credit union and what is the purpose of a bank?
Profit motive
I have worked for banks for most of my life in different capacities. This is what I saw. I saw a profit motive that was not tied to customer experience. At the retail level, there are many nice local banks. However, at the top, the profit motive is too strong not to find ways to nickel and dime and depositor and borrower.
The people who work there are usually do not care about in you anyway. Banks nickel and dime you with fees for their sales bonus. They try to sell you everything from insurance to stocks and mutual funds and put themselves out there as the one-stop solution to all your financial problems. However, this all comes at a price, that is fees.
Some banks have financial planners on hand, financial planners are nothing more than salesmen, who want to sell you products again with fees.
I have worked for banks, brokerage houses, insurance companies and they are all about making money off of you and do not have your best interest in mind.
In contrast, Credit unions are not for profit. They are for the benefit of the members. Why would you choose an institution that is about making money off of you? You could argue economic incentives make banks better able to sever you, but that is not true anymore. Credit unions are tech-savvy and it comes down to the bottom-line not the marketing department.
A bank’s purpose is to serve the shareholders, make a profit and when it makes a profit from you give these proceeds to other people who may or may not have their personal money with the bank.
A credit union’s purpose is to serve the customer. It is a non-profit organization. Any profits it makes goes back to you. Their philosophy is to serve the members.
Summary: My personal experience has been banking and has screwed me over every step of the way.
People at a bank vs People at a credit union
People go to a bank to work because they are not in medicine helping people or teaching or creating something or farming. They are not entrepreneurs. To them, it is a job to collect a paycheck. I have had many negative experiences with bank customer service and management. Its mostly the people who work for these organizations lack the brains to do something with their lives and they wind up in banking. Really, people in banking are usually the bottom of the barrel in terms of creativity and brains.
In contrast, people in Credit Unions are often there for the benefit of the members. I have been a member for over 25 years and never had a bad experience.
Credit Unions are better for the economy
Richard Werner has done research into the banking system and its current flaws. He prefers small banks and credit unions for a stable monetary economy.
What do I use for my banking?
I only use a credit union. I lived in Europe for almost ten years and traveled the world, worked in high finance and yet, I powered my financial life with a humble credit union.
Credit Unions have Internet banking, e-commerce assistance, financial services, home, student and car loans and real financial coaching and they have FDIC insurance
I use an American Eagle Federal Credit Union. Every experience with them has been positive because the people that work there I think like their job and helping the members. They are not greedy bankers who lack imagination so go into banking to get something from people, but rather at American Eagle Federal Credit Union people are there because they want to help their members.
You can make your credit union (and yes ) your one-stop solution without too much fear they are trying to milk you with fees.
No stress, no shopping around just clear solutions for your banking and life. With a credit union, you can just work at your day job and put your money in a credit union for your goals. When you have a lot of cash buy maybe some mutual funds they offer. They have IRAs, insurance, trust planning. Often these are third party companies, but I credit unions screen companies with their member’s best interest in mind.
Maybe you can save a little if you really shop around, but I believe in keeping it simple. If you keep your financial world simple and organized it frees you to do other things in life.
The next step for you is to, look into finding a credit union, though your associations. I am Polish so I could find an American Polish credit union. I am a teacher so I could join one connected with teachers. Some people are veterans others have religions credit unions, but find one. Here is a general link if you want to find more information: the Benefits of credit unions.
If you have questions you can ask me a person who has a lot of professional and personal experience with both.
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