Credit Unions VS Banks: Which One To Choose?

We all know how the US economy has been struggling for stabilization. But with the uncertainties of countries in Europe such as Greece, the US can’t help but be swept along with the tide. This of course leads to lowered interest rates with bank CD’s and savings accounts, and to top it all off, banks are now announcing that they will be charging monthly fees to debit cards. With all the hullabaloo going on with our trusted banks, many consumers are starting to look for better options. And right now, credit unions have got their attention.

The popularity of credit unions is slowly growing, but what do we really know about them and what is their difference to banks? Below is a quick comparison of credit unions and banks.


Ownership

This is where the big difference lies. Banks are for-profit organizations that are owned by shareholders. Since it is an institution where profit is foremost at their minds, this could mean that customers can become a means towards that end. This doesn’t mean that banks don’t care about their consumers, but it does mean that they are still looking to make a profit without driving their customers away.

Credit unions on the other hand is a non-profit organization that is owned by membership. Meaning, once you join a credit union, you will be a member and an owner at the same time. This gives you the right to run for the Board of Directors, and each member will get one vote regardless of how much money he has in the union. The ownership allows members some control on how the union is run, and even the directors are all volunteers without a salary. This process ensures that the union will look out for the financial interest of the members, and not a small group of private shareholders. Credit unions are also allowed to make a profit using the pooled money of its investors, but the reserve earnings is just to ensure the safety of the union in case of economic turmoil. The Board can also agree that once the reserve amount is reached, the excess can be given back to its members in the form of lowered interest rates or even bonus checks.

The only downside to credit unions is its membership. Most CU’s have a restriction with regards to eligibility because the members share a common denominator such as belonging to the same community, or having the same occupation. Bank membership however, is open to all.

Products

Banks and credit unions basically have the same products to offer. Whether it’s savings accounts, checking accounts, loans and certificates of deposit, you name it, credit unions have it too. The advantage that credit unions usually have over banks is that they can offer better rates such as higher interest rates for CD’s and lower mortgage amortizations. Banks on the other hand are often much larger than credit unions and may be able to offer more services and promotions as compared to smaller credit unions. Aside from that, banks also offer excellent online banking services and much more efficient customer service that is available 24/7.

Safety

Banks are insured by the Federal Deposit Insurance Company or FDIC for a maximum amount of $250,000 while Credit Unions are also insured by a different entity called National Credit Union Share Insurance Fund or NCUSIF. Some claim that the NCUSIF is arguably stronger than the FDIC. When it comes to choosing banks or credit unions however, aside from checking whether they are insured, it is also important to look at the reputation and the number of years the institution has been in service. Banks are generally larger and thus harder to topple down when an economic crisis hits, and insurance or not, it does take some time before depositors can claim their money should a financial institution closes.

As we can see, both banks and credit unions have their own pro’s and con’s. Banks are larger, considered to be safer, and may offer more services. Credit Unions on the other hand offer better rates, and are geared towards the financial interests of its members rather than private shareholders. It’s really up to the consumer which institution caters to their needs best. What about you? Which one do you prefer?


Easy Membership, Open to All Credit Unions

Because of economic instability, investors are looking for safer places to park their money so as not to lose their capital. CD rates are quite low, but despite this, it is still considered to be very safe which is why investors are searching for the highest CD rates available.

Although some banks offer competitive rates, the highest CD rates as of the past month comes from credit unions. Unfortunately, some credit unions are limited in membership due to several factors such as geographical location, community, and occupation. However, there are some credit unions that are what they call “open to all”.

One of the most popular open to all credit unions is Melrose Credit Union. It also gives some of the highest rates available. However, Melrose isn’t the only open to all credit union out there. Below are some of your possible choices:

1. Self Help Credit Union – Membership for this credit union is open for all those who join the Center for Community Self Help or CCSH. To become a member, all you have to do is pay a one-time fee of $20. An additional $5 is also needed to maintain an account. For a total of only $25 you can already open an account and enjoy the rates of SHCU.

2. America’s Credit Union - Although this credit union’s membership is for the Armed forces, civilian personnel and relatives of members, a person can also qualify for membership by simply joining the Association of the United States Army or AUSA. Only a one-time fee of $33 is required.

3. America’s Christian Credit Union – Although the membership for this credit union is limited to a certain belief, many American’s are Christians. Membership is automatic upon signing a document that represents your statement of faith or service.

4. Patelco Credit Union – In order to join this credit union, you have to become a member of the California Association for Older Americans. This CU however is not insured by the NCUA which is the counterpart of FDIC for banks. It is however, privately insured.

There are more open to all credit unions out there. Just be sure to ask and don’t immediately believe if they say credit unions are not for the general public.


Overall CD Rates Hold Steady For Week Ending August 19th, 2011

This past week we have seen the Dow move up and down, but ending the week down 450 points. Many banks have cut their CD rates but overall the top CD rate leaders have held steady. The biggest drops come from a major Credit Union – Melrose. Melrose has consistently kept their rates higher than any other major nationwide bank, but since August 8th they have cut their rates down by about a quarter percent.

Here are the current rates offered at Melrose Credit Union:

  • 12 month CD rates down to 1.05% from 1.31%
  • 24 month CD rates down to 1.31% from 1.56%
  • 36 month CD rates down to 1.81% from 2.07%
  • 48 month CD rates down to 2.07% from 2.32%
  • 60 month CD rates down to 2.57% from 2.83%

For the week ending August 19th 2011, the top CD rate holders have held steady:

  • 3 month CD’s – AloStar Bank of Commerce at 0.76%
  • 6 month CD’s – AloStar Bank of Commerce at 1.05%
  • 12 month CD’s – AloStar Bank of Commerce at 1.27%
  • 24 month CD’s – MainStreet Bank at 1.50%
  • 36 month CD’s – MainStreet Bank at 1.90%, DOWN from 2.00% from August 8th
  • 60 month CD’s – MainStreet Bank at 2.50%

Overall the best CD rates have held steady, but we suspect another drop is coming. Connexus Credit Union was also offering some of the highest CD rates, even higher than Melrose Credit Union but have since dropped their rates also.

Connexus Credit Union requires a minimum deposit of $10,000 to receive the higher rates:

  • 6 month CD rate of 1.25%
  • 12 month CD rate of 1.50%, which is down from 1.75% on August 10th.
  • 60 month CD rate of 2.50%, which is down from 3.00% on August 10th.

With these lowered rates, this puts Melrose back in the lead with the best CD rates you will find on the market. Even thought they are a Credit Union, anyone can join as long as you meet a few requirements such as opening an account and funding a savings account. They also have a minimum deposit of $5,000, which might be a little high for the average saver.

Be sure to check out our CD rates page for the most up to date rate information. CD rates can change at a moments notice so be sure to check with the financial institution about their current rates before investing.


Who Is Offering The Highest CD Rates?

If you are looking for the highest CD rates being offered today, you won’t find them at your local bank or at any major bank. Most of the highest CD rates are being offered at local credit unions. This makes it almost impossible for the average investor to get ahold of these rates. Reason being, you have to be a member of the credit union offering the rate. Most Credit Unions only allow specific people to join their union, whether it be school teachers, military personnel and family members or employers of major companies. Not only do you have to be a member but also most of the time you have to fulfill a list of requirements to be a member.

Melrose Credit Union has been one of the best credit unions to join who also consistently has the highest CD Rates offered. Here are the rates being offered through Melrose Credit Union:

  • 12 Month CD – 1.31% APY
  • 24 Month CD – 1.56% APY
  • 36 Month CD – 2.07% APY
  • 48 Month CD – 2.32% APY
  • 60 Month CD – 2.83% APY

These CD rates are higher than what you will find at any major bank. One year ago we posted these rates from Melrose, which you can see have dropped about one half of a percentage point.

(Reported August 2010)

  • 12 Month CD Rate – 1.76% APY
  • 2 Year CD Rate – 2.02% APY
  • 3 Year CD Rate – 2.52% APY
  • 5 Year CD Rate – 3.29% APY

To get into the Melrose Credit Union you have to fill out the registration form and pay $1. Once accepted you can then deposit the minimum of $5,000 to start earning the highest rates being offered today. Your earning will be compounded quarterly and if you decide to withdraw your money early, you will end up paying an early withdrawal penalty.

There are other credit unions offering decent CD rates but some will be harder to get into. Some have higher requirements, such as having a specific number of transactions each month using a debit card or having a direct deposit set up to your account. If you do not mind these little hassles then it’s probably better to go with a Credit Union than with a bank for investing in CDs right now. Melrose is also NCUA insured (this is the Credit Union’s FDIC insurance).


Best CD Rates For February 17, 2011

This could be the first signs that CD rates will start increasing. One day after Sovereign Bank took the top spot for the 60 month CD term, a California based bank- Kaiser Federal Bank matched the same 3.0% APY. Kaiser Federal Bank raised its rates from 2.75% to 3.0% APY, making it a two way tie for the best available 5 year CD.

Kaiser requires a minimum of $10,000, which is much higher than Sovereigns’ minimum of just $500.

Here is a list of the top CD rates available nationally:

*TermBankFebruary 17December 1
3 Month CDCalifornia First0.80% APY0.95% APY
6 Month CDMetropolitan National1.15% APY1.15% APY
12 Month CDIncrediblebank1.45% APY1.51% APY
24 Month CDSalem 5 Bank1.75% APY1.76% APY
36 Month CDMelrose Credit Union2.17% APY2.27% APY
60 Month CDSovereign Bank3.00% APY3.03% APY

Be sure to get the best CD rate available by checking out our CD Rates board.


Alask USA Credit Union Review and Rates

Alaska USA Credit UnionAlaska USA Federal Credit Union primarily serves Alaska, the Puget Sound area of Washington State, and California’s High Desert.

Currently Alaska USA is the largest provider of consumer financial services in Alaska. Member is groing in Washington and California. Alaska USA Credit Union provides business services, including checking, commercial loans, and insurance.

See a BankAims List of Credit Unions and Info about each.

Here are some facts about Alaska USA CU from their website.

  • Founded in 1948
  • Over 390,000 members in all 50 states and around the world
  • Over $4 billion in assets
  • 59 branches in Alaska, California, and Washington
  • Most branches open seven days a week
  • Financial Centers in Anchorage, Fairbanks, Kenai, Soldotna, and Wasilla
  • Offers consumer and commercial deposit and loan services, as well as mortgage and real estate loans, insurance, investments and investment management, and title and escrow closing services
  • Credit union accounts federally insured by the National Credit Union Share Insurance Fund (NCUSIF)

Alaska USA Federal Credit Union is one of the largest Credit Unions in the Nation.

Alaska USA CU Deposit Rates.

Rates and terms vary depending on minimum deposit amount.  With a $500 deposit rates are as follows. (Please note the date of this article for rate accuracy.)

Alaska USA CU Loan Rates

  • 30 year fix – 4.5% with a 4.631% APR
  • 15 year fix – 3.750% with a 3.975% APR

To see more information or get rate info see here.


FedONE Credit Union 6 Month CD Rate at 1.00% APY

The best CD rate for the 6 month term is sitting at 1.15% from Bank of Internet, but FedONE Federal Credit Union comes in close. We are seeing a trend that many Credit Unions are starting to take the top spots of most certificate of deposit rates, at the same time large banks are cutting their rates and falling off the leading charts. FedONE Federal Credit Union doesn’t have one of the best 6 month CD rates, but they do have something worth mentioning. This small credit union has been in business for over four decades, which is something worth noting with all of the current bank failures going on.

You have to become a member at FedONE before you can buy into any of their CDs. Each CD account requires a minimum deposit of $1,000.

Other FedONE CD rates:

  • 12 month certificate of deposit at 1.10% APY
  • 24 month certificate of deposit at 1.35% APY
  • 36 month certificate of deposit at 1.35% APY

FedONE has been around since 1961 when the Justice Department of Immigration and Naturalization Services opened their own credit union stationed in San Pedro, California. Since the beginning FedONE has evolved into one of the best California credit unions, servicing the INS, Department of Justice employees who work in or are headquartered in Arizona, California, Hawaii, Nevada, the Territory of Guam, the Mariana Islands and their immediate family.

FedONE has two California locations in Laguna Niguel and Los Angeles. Be sure to check their website for all of their updated CD rates.


Highest CD Rates For September 7 2010

Not much changed over the weekend as this past Monday was Labor Day in the States. The same banking institutions from our September CD Rates post are still on the board.

With that said here are the highest CD rates being offered nationally as of September 7th, 2010:

*TermBankSeptember 7thLast Week
3 Month CDiGoBanking1.35% APY1.35% APY
6 Month CDNewDominion Bank1.25% APY1.25% APY
12 Month CDSallie Mae Bank1.55% APY1.55% APY
24 Month CDNewDominion Bank1.95% APY2.00% APY
36 Month CDDanversbank2.50% APY2.50% APY
60 Month CDMelrose Credit Union3.03% APY3.03% APY

Melrose Credit Union is on the list because they allow anyone, anywhere to register for their Credit Union. The fee for joining is $1.00 and they have some of the nation’s highest CD rates.


Melrose Credit Union Is Offering Great CD Rates

Melrose Credit UnionAs we have been noticing lately credit unions have been offering higher CD rates than banks.

Today we have discovered that Melrose Credit Union has some very high CD Rates being offered.

Not all credit unions allow all Americans to join.  With Melrose Credit Union all US residents can sign up for ony $1.

Check out our CD Rates page for more CD Rate information.

The minimum deposit for the listed certificates is $5000 for each term, they are compounded quarterly and do have early withdraw penalties.  Melrose Credit Union is NCUA insured.  To get more information visit their website rates page here.

With CD Rates being so low right now finding such good rates from an insured credit union is a good thing.  This may be an opportunity for you to get settled into a certificate which can produce some good earnings for you.


Navy Federal Credit Unions Great Starter Certificate of Deposit

Navy Federal Credit UnionIf you are new to CD’s (certificate of deposits), just want to get your feet wet, or have a small amount of money to invest then Navy Credit Federal Union has a great starter certificate you may be able to take advantage of.

We have been noticing that credit unions have been offering better deals on certificate of deposits then banks have  (see Northeast Community CU 2.50% APY on a 12 Month CD).  Although Navy Federals CD rates are not the best they do have a great starter package.

Check out the nations Best CD Rates.

It is called their EasyStart Certificate and here are the details.

  • 12 month term
  • 1.15% APY
  • Only a $100 Minimum Deposit

With a $100 minimum deposit almost anyone, new to CD’s or not, can take advantage of this deal.  Most of the best 12 month CD rates we see have minimum deposits in the thousands.

So if you are new to certificates and do not have much money to get started this NFCU EasyStart Certificate may be a great introduction to CDs for you.

For the fine print and other details for NFCU visit here.