Bank vs credit union

[Ottakee]

I will admit I have not used a bank for almost 30 years, just a credit union.

I was just wondering if I am missing something here.  The bank my daughter uses (maybe not for long) charges $4.95/month fee for a basic account and up to $12/month for an account that can write checks....that one the fee is waved if you have over $500/month auto deposited.  But then there is a $5 fee for a money order.

We also had to go into the branch to get a new debit card (after it had an unauthorized charge) and they need to send her one.   At my credit union we can either call and they mail one or we can go Into the branch and get a new one in 5 minutes.

My credit union account also pays 3% interest, is free, has check writing, quick debit card replacement, free ATM, free money orders, etc 

Is this common?  If so, why do your basic common working folks use a bank?  There has to be something I am missing here.

[73349]

Many credit unions limit membership to people from a certain profession, workplace, or location, so one is not always eligible to join one. I like mine a lot, but was only able to join because of where my spouse used to work. (Now anyone can join for a fee, but it wasn't like that before.)

[rebcoola]

We always have found credit unions better fees lower, better interest rates.  We have never had trouble  qualifying seems like most areas have at least one that you just have to live there.  I'm sure their are reasons to use a bank instead but I've never had any. 

Edited October 8, 2020 by rebcoola

[LuvToRead]

We use a locally owned bank and don't pay any fees.  There are fees for stuff, (like going below a minimum balance, using another bank's ATM) but we have never had to pay any.  There aren't any fees for just having the account.  My daughter as a student account with no minimum balance.  We earn very little interest - around .05%. 

[stephanier.1765]

Our dividend rate is 0.10% and the highest I could find was 0.56% for those with IRAs with balances over $100,000. Until this thread came up, I didn't even know we had been switched over to a senior's account, which happens automatically when the primary member turns 50. Not a lot of differences when you are just doing basic banking but a lot of little things that are nice bonuses. I'll have to remember that for the future.

[Ottakee]

20 minutes ago, happysmileylady said:

 

I have used a credit union in the past, and I haven't found ANY place that pays 3% interest.  That's a super amazing rate.  

My credit union pays the 3% up to $15,000 for a MAX checking account.  You do need auto deposit, use debit card 10 times a month and log in to banking 4 times a month to get that high rate.   

It is the best I have found and those rules are easy for me to meet.

[Calm37]

I have an account with a large national bank and one with a local credit union. That 3% checking account at our credit union comes with some hoops to jump through. I do not use a debit card regularly (which is one of the hoops), so that would stress me out. 

The fact is that online banking is just easier with the large national bank. There is also a branch of this bank just a few miles from my house, also a drive-through station, and I have a personal banker I can call with any questions. She knows us! I have never paid any fee with my bank, and even get my checks for free.

I have taken to paying my credit union mortgage three weeks early since covid started because it takes a long time to post that payment if you mail it in. There is no credit union drive through. One time when I called to question the posting delay, it seemed clear that there was one lady that did that job and she was out!!!! Same for my property taxes. "Oh, "Betty" has to go one county at a time, she's not to your county yet." So it was pretty obvious that it was all happening manually!

ETA: We have a local bank here that is starting to offer this 3% account. I guess it's not just a credit union thing. They are called "Kasasa" accounts. 

Edited October 8, 2020 by Calm37

[Bambam]

We've used credit unions pretty much exclusively for the last 20+ years. We get free checking (and often free checks!), interest on checking and savings that is usually slightly higher than bank rates, credit cards with no fees + cash back, good local service (when you are located close to them!), free online-bill pay, and probably other stuff I don't know about.  We also get a decent dividend at the end of each year since the CUs are non-profit and split the profits with their members.  I don't use ATMs, but I remember when we did, you did have to figure out where one was that you could use without a transaction fee. 

The local banks here now charge a fee ($5, I think) if I (a non-customer) walk in to cash a check that was written by one of their members on the account held at that bank.  That's ridiculous, IMHO. They should know whether that check is good and just hand me the money. That's one of the reasons I won't deal with banks. The fees keep adding up.

I will say one of our credit unions will pay a substantially higher interest rate if you use your debit card x times/month and have over $y direct deposited. I'd love to take advantage of that, but I don't use debit cards. 

[Ottakee]

Ok...I can see the availability of credit union branches, etc can be an issue.  We have one in our town and their online banking is super duper easy to use.

 

[Bootsie]

For most households, there is little difference to them if they are using a bank or a credit union.  Historically, credit unions were limited in the types of loans they could make which impacted some families needing a wider range of banking services with their local institution.  That difference has become minor in the past 20 years because of deregulation in the industry.  Credit unions are non-profits owned by their members; as such, they do not pay corporate income tax--which is a huge cost savings for the institutions, allowing them to operate with lower expenses.  Historically, many were tied to employers who provided inexpensive office space so that the credit union had other cost advantages over banks and could offer better deals to their members.  

[Sunshine State Sue]

We get a Canadian check and our credit union can't handle it.  I have asked over the 20+ years we've gotten it.  I'd love to get rid of the bank account.  If anyone knows another way to handle a Canadian check in the US, I'm all ears.

[Liz CA]

Someone once described it as banks being business for profit and credit unions being non-profits.

If credit unions had been more accessible 30 years ago, we would have every account there. As it is, we started with a bank and then opened credit union accounts for longer term savings (more funds there) because of higher interest. 

My bank charges me $5  every months unless my deposit exceeds a certain amount. When I worked part-time I got dinged, now I don't but I always resented it. Suppose we could make the jump to the CU altogether but accounts are tied in to so many things - especially in the digital age.

[Liz CA]

2 hours ago, Ottakee said:

Ok...I can see the availability of credit union branches, etc can be an issue.  We have one in our town and their online banking is super duper easy to use.

 

I think this was the issue many years ago - very few branches and you had to be associated with a certain industry. Once they did away with it, a lot more people seemed to have switched. Our CU 's website is way more advanced and user friendly than our bank's.

[Bootsie]

48 minutes ago, Sue in St Pete said:

We get a Canadian check and our credit union can't handle it.  I have asked over the 20+ years we've gotten it.  I'd love to get rid of the bank account.  If anyone knows another way to handle a Canadian check in the US, I'm all ears.

Is the check simply drawn on a Canadian bank or is the check in Canadian dollars?    We have money direct deposited in our bank account in the US from a bank in Canada, but the amount is stated in US dollars rather than in Canadian dollars.

[Sunshine State Sue]

7 hours ago, Bootsie said:

Is the check simply drawn on a Canadian bank or is the check in Canadian dollars?   

Canadian $$ that needs to be converted to US $$.

[G5052]

We had accounts at a bank and a credit union. The credit union membership came through my ex's employment. 

Recently I dropped the credit union. There was a time that it was better, but no longer. Their rates were consistently the same or only very slightly better at our bank, and they started charging $5/month for an account if you didn't have a direct deposit. The closest branch is not convenient for me.

If they had remained like they were 5-10 years ago, I might have just kept them. But even the level of service wasn't stellar anymore. 

Now my bank is in the process of a merger with another local bank, so we'll see how that goes. They will double their branches and ATMs.

[Arctic Bunny]

10 hours ago, Sue in St Pete said:

We get a Canadian check and our credit union can't handle it.  I have asked over the 20+ years we've gotten it.  I'd love to get rid of the bank account.  If anyone knows another way to handle a Canadian check in the US, I'm all ears.

Well, there’s the problem right there! They’re sending you a cheque, and you’re trying to deposit a check! 😉

 

[Lady Florida.]

14 hours ago, Ottakee said:

I will admit I have not used a bank for almost 30 years, just a credit union.

I haven't used a bank since the mid 1980s. I belonged to the teachers credit union when I met dh and he belonged to the one for space industry workers. When we combined our finances we moved all my accounts to his credit union. They didn't always have all the services a bank offers, such as mortgages loans, but they offer much more now. I really don't think you're missing anything by not using a bank. 

 

14 hours ago, Carolina Wren said:

Many credit unions limit membership to people from a certain profession, workplace, or location, so one is not always eligible to join one. I like mine a lot, but was only able to join because of where my spouse used to work. (Now anyone can join for a fee, but it wasn't like that before.)

Yes, it seems most credit unions no longer have those requirements. The teachers credit union I used to belong to was for teachers, school board employees, or their families (my mother switched from a bank to my credit union back then). Now you just need to "live, work, or worship" in one of the counties where they have branches. It's the same with the one dh used, which has been our CU for 25+ years. You used to have to work in the space industry or have a family member who does. Now it has the same live, work, or worship requirements. 

[Bootsie]

5 hours ago, Sue in St Pete said:

Canadian $$ that needs to be converted to US $$.

DH had a Canadian check in a Canadian dollars that he got processed at our local bank, but I am not sure what types of fees were involved.  Now, DH gets a small monthly retirement check and the easiest way was to get the check written in US dollars.  Friends have a larger amount of Canadian dollar income.  They have an account at a Canadian bank and then withdraw money from that account if they need it.   

[historically accurate]

My first grown up job was in Motorola's Credit Union. I had a credit union account that we used less and less over the years (not a Motorola, a local credit union). As the years have gone by, that credit union has piled on fees and lowered savings rates. Their latest scheme was charging my kids' savings accounts $6 every quarter they don't use them. Um, no, don't steal $6 out of their $35 they're trying to save. We switched everything from them after that fiasco. 

I use an online bank - higher savings rates, better online access. Can access from anywhere with an app or through the website.

I looked at the credit unions' savings rates: if you have a $100,000 balance, you will earn .5%. Up to $25,000 earns you .05%. Nowhere near 3%; I might be tempted back to them for 3%. I currently earn .5% on my less (far, far less) than $100,000 balance at my online bank. 

 

[livetoread]

After the financial crisis in 2008, we went to a credit union out of big bank protest and stayed because of the awesomeness. Anyone can join, and we never looked back.