Why do people choose a credit union over a bank? It isn’t just a matter of one’s profession or union encouraging the choice – though that certainly plays a role. People like credit unions for other compelling reasons.

A fundamental (and philosophical) difference. Credit unions are not-for-profit organizations owned by their members; retail and business banks are for-profit private enterprises. A bank seeks to maximize earnings as it serves its customers. The more income it can derive from you, the better for its future. Banks have to answer to shareholders. Credit unions must ultimately answer to members.

Credit unions commonly use profits to fund reserves. Excess earnings may be indirectly returned to members – they can translate into reduced loan rates, higher interest rates on savings accounts (which are called share accounts), and lower fees. Some CUs have even sent members bonus checks.

A chance to potentially save money over time.

Money which banks might charge you, that is. Checking accounts are free at most credit unions. In most cases, a checking account at a CU requires no minimum balance, and there are no per-check fees or overdraft fees. Historically, most credit unions haven’t returned cancelled checks to their members – mostly because of the expense. However, many CUs provide them at request.

What about ATMs? Well, there are more than you might think. Many credit unions belong to the CO-OP Network, a credit-union only ATM network with more than 28,000 ATMs in America. Credit Union 24, a member-owned, full-service ATM cooperative, helps CUs offer their members more than 100,000 ATMs and more than 50,000 surcharge-free ATMs.1,2

If you need to get a loan to buy a car or some other major item, the person on the other side of the desk may quickly ask you if you belong to a credit union. There’s a reason for that: loan rates at CUs are often better than those at banks.

Are your assets federally insured at a credit union?

Yes, in almost all cases. Just as almost all banks are FDIC-insured, about 98% of credit unions are federally insured through the National Credit Union Share Insurance Fund, administered by the National Credit Union Administration (NCUA). No member of a federally insured credit union has lost a cent of their insured credit union savings in the NCUA’s history.3

A share account at a federally insured credit union is insured up to $250,000 through the end of 2013 as a result of the Emergency Economic Stabilization Act of 2008, the same level of insurance that the FDIC affords bank accounts.3

Credit unions may not be as numerous as banks, but these are some of the reasons why their members prefer them. If you have eligibility to join a credit union, it is worth seeing what that credit union can do for you and comparing the potential long-term savings of a credit union relationship against a bank relationship.

Jeff Rose is a Representative with SIU CU Investment Services which is a DBA under LPL Financial. He may be reached at Good Financial Cents, 618-549-8632 or jeff.rose@siucu.org.

This material was prepared by Peter Montoya, Inc. not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

Jeff Rose is a Registered Representative with, and securities and insurance products are offered through LPL Financial and its affiliates,

Member FINRA/SIPC. SIU CU Investment Services is not a Registered Broker/Dealer and is not affiliated with LPL Financial.

Not FDIC/NCUA Insured Not Bank/Credit Union Guaranteed May Lose Value
Not Insured by any Federal Government Agency Not a Bank Deposit

1 co-opfs.org/public/locators/atmlocator/index.cfm [12/23/09]
2 cu24.com/mapcoverage.asp [12/23/09]
3 ncua.gov/Resources/ShareInsuranceToolKit.aspx [12/23/09]