Comparing bank options

When it comes to your banking options, you can choose from a traditional bank or a credit union. Before you decide on which option is best for you what you will need to do is compare your banking options. When comparing the banking options you will see that both of them are good options, but there are important differences between the two.

To make an informed decision you will need to compare your banking options. Here are the steps you will need to take to compare your banking options.

Step one:
You need to understand who is going to be in charge of the financial institution that you are considering. Banks are for-profit businesses and they answer to stockholders and a Board of Directors, while credit unions are non-profit organizations that are controlled by their members. The members of credit unions elect the Credit Union Board Members, which the board members work on a voluntary basis.

Step two:
The next thing that you need to do is determine where the dividends are going. With a bank any surplus earnings that they have after expenses and the required reserves are paid are returned to the investors. A credit union usually uses the surplus earninsg to reduce loan rates and offer low-cost member services. They will also issue a small portion of the surplus earnings to their members in the form of a dividend.

Step three:
Find out about who is securing your funds. If you are using a bank as a financial institution the Federal Deposit Insurance Corporation, FDIC, is the one insuring your funds, so any losses are covered by the United States government. Credit Unions are insured by the National Credit Union Share Insurance Fund, NCUSIF. This is the only deposit insurance fund of its kind and is a pay-as-you go type of system. The pay-as-you-go system eliminates any losses that might occur.

Step four:
You will need to decide which method of banking is going to listen to your needs, decide how you want your voice to be heard with your banking option. In a credit union every member that owns the credit union has the right to vote on what is going on. With a bank you are not a member so you are not allowed to vote, only the stockholders and the Board of Directors are allowed to vote in a bank. Most banks will allow customers to make suggestions on what can be improved, you can also voice any concerns that you might have, most of the time these suggestions are welcomed so the bank can make improvements. Even though the comments and concerns are welcomed that doesn't mean that the changes you want to see are going to be made, they have to be voted on first.

Step five:
The last thing that you will want to do is to compare fees and services that you local bank offers with the fees and services that your local credit union is offering. This is important because even though the bank and credit union offer similar services they usually have two different types of customers.

Once you have done, all of this comparing you will be ready to make a decision based on your financial needs. You want to select the banking institution that meets all of your requirements, so that you can rely on them to ensure your financial future. For example, credit unions might require you to have a savings account before you open a checking account, if you are not interested in a savings account this will not be the right option for you.