ON AIR NOW

LISTEN NOW

Weather

cloudy-day Created with Sketch.
65°
Broken Clouds
H 87° L 68°
  • cloudy-day Created with Sketch.
    65°
    Current Conditions
    Partly Cloudy. H 87° L 68°
  • cloudy-day Created with Sketch.
    84°
    Afternoon
    Partly Cloudy. H 87° L 68°
  • partly-cloudy-tstorms-day Created with Sketch.
    79°
    Evening
    Sct Thunderstorms. H 87° L 68°
LISTEN
PAUSE
ERROR

The latest top stories

00:00 | 00:00

LISTEN
PAUSE
ERROR

The latest traffic report

00:00 | 00:00

LISTEN
PAUSE
ERROR

The latest forecast

00:00 | 00:00

Banks vs. Credit Unions: Which one is right for you?

Once you start making money, one of the most important questions to ask is how - and where - you can save it. Choosing between a bank or a credit union is one of the first decisions you should make, but it's not always an easy one. We've got a breakdown of some of the most frequently asked questions.

The basics:

A credit union is a non-profit institution - the members of the credit union are the owners of the credit union. Banks are for-profit corporations with shareholders. Both credit unions and banks offer basic financial services like checking accounts, saving accounts, credit cards, ATM cards, as well as loans and mortgages.

"Credit union users like knowing that there's no conflict of interest," says Bart James, personal finance expert and author of The Guide to Wise Investing in Today's Market. "If a credit union makes a profit, it goes back into the organization to help its members, whether that's in the form of a lower interest rate on a mortgage or a lower price on new checks."

READ: Can ATM alarms help curb ATM armed robbery?

With that said, most people in the U.S. choose to put their money in a bank. Typically, big banks offer better online infrastructure and more ATM locations than credit unions.

"Most banks in this country have an app, or you can access them on a mobile device, a tablet - anytime you want," says James. "You also have the luxury of using your bank's ATM at any location throughout the country."

The numbers:

While it's true that credit unions frequently offer better interest rates, in many cases banks are just as competitive. According to March 2012 data from interest rate website DataTrac, it depends on what you're buying.

If you're buying a car with a 60 month lease, the average interest rate at a credit union stands at 3.38%. For the same product, the average interest rate at a traditional bank stands at 5%. Meanwhile, banks offer a better option for individuals considering a 15 year fixed mortgage, with credit unions offering an average interest rate of 3.48% vs. banks that offer a rate of 3.39%.

If you're looking into a 30-year fixed mortgage, it doesn't seem to matter where you turn: the average interest rate from both banks and credit unions stands at 4.11%.

READ: What is a zombie bank account?

ATM fees will vary at all institutions, but having more no-fee ATMs accessible will save you money in the long run. If you join a credit union, make sure to ask if your credit union is a member of the Co-op Network, as the network offers 30,000 surcharge-free ATMs nationwide.

"Those little fees can add up in no time," says Carl Spain, executive at Consumer Banking Services in Flint, Mich. "If you need to take cash out frequently, the monthly cost for withdrawals with a $3 or $5 fee can really make a dent in your balance."

The restrictions:

"Different credit unions have different member requirements, so if you're a plumber you can't necessarily go join a teachers' credit union," says Ben Harvey, spokesperson for the Money Management Bureau in Clearwater, FL.

"Your company may have its own credit union, or you may be eligible to join a local credit union that supports veteran's organizations or education," Harvey says. "Regardless, credit unions are not as easy to join as a bank that's open to anyone and everyone."

READ: Crisis Button: I lost my wallet, what do I do?

Most credit unions do not have in-house wealth management advisers - they typically partner with other investment service companies to assist members with items like mutual funds and IRAs, says Harvey. Banks, however, typically have an entire division of the company devoted to long-term retirement and investment planning, and the services are often cheap if not free.

"If you're looking for wealth management tools accessible at the same branch where you make deposits, a bank may be your best bet," he says. "On the other hand, credit unions have sometimes been known to offer wealth management or money-saving classes which a big bank simply doesn't have time for."

The guarantees:

"One common misconception that drives me crazy is that credit unions somehow aren't insured as much as banks," says James. "The guarantees are there, they're just in a different package."

Credit unions are insured by the National Credit Union Administration, and member funds are insured up to $250,000. For banks, the Federal Deposit Insurance Corporation (FDIC) also ensures customer funds up to $250,000.

"Another guarantee that you have with some credit unions is the ability to elect leadership or even serve on the board of directors yourself," says James. "In a bank, you have a CEO who is bound by fiduciary duty to do what's best for the company, but you don't have any say as to who that person is or what decisions are made."

Most credit unions have a board of directors that is composed entirely of credit union members, and some have open elections during which credit union members can vote for leadership positions.

---

Heading out to do some comparison shopping? James advises keeping these five items top-of-mind when making a decision:

  • What are the fees for using an out-of-network ATM?
  • What kind of online banking capabilities do you need?
  • How close is a branch to my home? What about my office?
  • Will I need a home or car loan? What are those rates?
  • How's their customer service - if I call, how long will I be put on hold?
Kathryn Elizabeth Tuggle is a seasoned New York-based personal finance editor and writer who adores saving, investing and thrift store shopping. After getting her start writing about small businesses for the Inc. 500 at Inc. Magazine, Kathryn learned her way around the NYSE and NASDAQ while working at the The Financial Times. In 2007, Kathryn joined the Fox Business Network before its inception and was instrumental in launching the company's small business and personal finance sites. Obsessed with all things spending, saving and social media, you can find Kathryn tweeting her latest adventures with Dimespring at @KathrynLizbeth.
Read More
VIEW COMMENTS

There are no comments yet. Be the first to post your thoughts. or Register.

The Latest News Headlines

  • Luanne Haygood, the mother of a 10-year-old boy with autism, is angry that her son was arrested earlier this month at his Florida school for allegedly punching and kicking his teacher six months ago. Okeechobee County school resource officers put the child in handcuffs at Okeechobee Achievement Academy, but Haygood said the school district isn’t properly equipped to deal with autistic children. “He has autism. He doesn’t know what’s going on,” she can be heard saying in the video that she recorded of her son’s arrest. “He’s scared to death. He’s 10 years old.” >> Watch Haygood's video here (WARNING: Viewer discretion advised) Haygood watched as her son was removed from his classroom for allegedly leaving a paraprofessional with scratches and other marks back in October. He was arrested on an outstanding warrant on allegations of felony battery on a school board authority. “I was extremely angry. That I felt like this was a power play. I felt like this was a this is what you get. You can’t do anything about it. We’re going to arrest your son if he can’t abide by the rules,” Haygood told WFOR, adding that her son's disability is the reason behind his behavior. “To go and have him arrested on school grounds in front of other students, in front of personnel, during school hours – they could’ve come to my house at any time to tell me what was going on.” >> Read more trending news The boy reportedly spent one night in juvenile detention, according to the Washington Post. The child was then released on house arrest and is expected to appear in court next month. Haygood said the incident would never have happened if the school had the proper services to address his disability. “I want something done,' she told WFOR. 'I want other kids to not have to go through this.” According to CNN, the school district released the following statement: 'It has been district procedure to invite students in to take the Florida Standards Assessment. The district would not invite someone to one of our campuses for the sole purpose to arrest. 'The district routinely assists students by providing services from our board certified behavioral analyst, licensed mental health counselors, school social workers, and psychologists. As a team, these individuals develop interventions, conduct assessments, and offer support both at school and in the home in order to assist students and families. 'The district is unable to provide specific information as to both current and past incidents regarding this or any other student due to educational laws and rules. It is our hope that we can continue to work with all families to help their students improve both behaviorally and academically.' – The Cox Media Group National Content Desk contributed to this report.
  • An 8-year-old boy died after a television fell on him at a home in Jacksonville, Florida, his parents said. >> Read more trending news Jacksonville police officers were called to Painted Pony Drive early Friday morning and found Christian Dozier unresponsive in his bedroom. He was taken to the hospital, where he died from his head injuries. His parents told ActionNewsJax that he was kicking an entertainment center when the TV fell on him. His mom said he loved to hang out with his siblings and play sports. 'It's horrible … especially when you know your grandchild plays with them -- so it's horrible,' neighbor Regina Williams said. 'It's horrible anytime something (happens) to a kid so when I (saw) the crime scene tape, that's the last thing I thought, is that it'd be one of the children.
  • President Donald Trump on Friday promised a “big announcement” next week on his plans for major tax reform, but soon after, top administration officials were tempering expectations, indicating that the White House would be releasing broad goals of a tax plan, not the details in full legislative text. “We’ll be having a big announcement on Wednesday having to do with tax reform,” Mr. Trump said as he signed several executive orders dealing with financial matters at the Treasury Department. “The process has begun long ago, but it really formally begins on Wednesday,” the President added, with Treasury Secretary Steven Mnuchin – his chief tax reform architect – standing beside him. #URGENT: President Trump says he will have a 'big announcement' on tax reform Wednesday — Carol Costello (@CarolCNN) April 21, 2017 Mr. Trump has talked for months about acting on tax reform, but after three months in office, the President has not sent any formal plan to the Congress, where many GOP lawmakers are waiting to see some details. Reports on Friday night seemed to indicate that the announcement next week will be on the broad brush side – not the nitty gritty details of major tax changes. In an hour long interview with the Associated Press, the President also hyped his own tax reform announcement for next week, saying the tax cuts he will propose would be “massive.” BREAKING: Trump tells @AP he will unveil tax plan next week that includes 'massive' tax cut for individuals and businesses. — AP Politics (@AP_Politics) April 21, 2017 “Bigger, I believe than any tax cut ever,” Mr. Trump said. But his goal to get it out next week – just days before the 100 day mark of his presidency – evidently wasn’t what top aides had been envisioning. “Trump Vows to Unveil Tax-Cut Plan Next Week, Surprising Staff,” was the headline in the New York Times.
  • The death toll has risen to “as many as 140” Afghan soldiers in the wake of Friday’s attack on a military base by Taliban members apparently disguised in military uniforms, officials said. >> Read more trending news One official in the northern city of Mazar-i-Sharif, where the attack occurred, said Saturday at least 140 soldiers were killed and many others were wounded, Reuters reported. Other officials said the toll could even be higher. A U.S. official in Washington on Friday had put the toll at more than 50 killed and wounded, Reuters reported. As many as 10 Taliban fighters, dressed in Afghan army uniforms and driving military vehicles, slipped onto the base and opened fire on mostly unarmed soldiers eating a meal and leaving a mosque after Friday prayers, officials told Reuters. The base is the headquarters for the Afghan National Army's 209th Corps, responsible for much of northern Afghanistan, including Kunduz province where there has been heavy fighting. Taliban spokesman Zabihullah Mujahid said in a statement on Saturday the attack was retribution for the recent killing of several senior Taliban leaders in northern Afghanistan. 'The attack on the 209th Corps today shows the barbaric nature of the Taliban,' U.S. Gen. John Nicholson, the commander of coalition forces, said in a statement on Friday.
  • A South Florida teen is being charged as an adult after deputies monitoring his social media pages arrested him this month on gun-related charges. >> Read more trending news  Joshua Troutman, 17, was transferred from juvenile custody to the Palm Beach County Jail on charges that include possession of a weapon, discharging a firearm in public and grand theft of a firearm. He also has multiple open cases in juvenile court, including charges of carrying a concealed weapon, grand theft and burglary. During his initial court appearance on Friday, Judge Caroline Caroline Shepherd ordered Troutman’s open juvenile cases be reviewed and set his bond on the adult charges at $50,000. He was also placed on in-house arrest with an electronic monitor and ordered to have possession of neither weapons nor devices that can access the internet. According to the arrest report, a Palm Beach County sheriff’s detective last month monitored postings by Troutman on social-media sites, including Facebook and Instagram. The detective noted that Troutman posted several pictures and videos with multiple firearms in his waist, hands and pockets. Troutman is currently classified as a juvenile delinquent and is not allowed to possess firearms, investigators said. Authorities say he has a history of burglary and resisting arrest with violence. He remains under supervision as a juvenile until his 19th birthday. “He is a danger to the community,” a prosecutor said in court Friday. Investigators say Troutman posted one video of himself firing shots from a small-caliber firearm into the ground in his backyard. After being taken into custody, he reportedly told deputies he stole a gun from a box stored in a shed at an unspecified residence in Boynton Beach. When asked about the fired shots seen on video, Troutman told deputies he was only shooting into the ground and did not hurt anyone, the report said.

The Latest News Videos