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Credit Union or Banks: Which is best?
Old 09-25-2008, 01:44 PM   #1
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Credit Union or Banks: Which is best?

REWahoo suggested in a post I had that the better place--other than a bank--for that loose cash would be a credit union. I know zip (and I mean zip) about putting money in a credit union. And, for some reason, I thought they were never FDIC insured. I must be wrong?
May I ask others who know more than me on this (which won't be hard): Would it be better to place your cash in a credit union or a bank (FDIC, of course, insured)?:confused:
If I were to place some cash in a credit union is there anything I need to know (i.e., is it FDIC insured and other questions)?

(Where are you now REWahoo when I need you?)
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Old 09-25-2008, 01:48 PM   #2
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<sigh> Here I am...

CU's deposits (shares) are covered by the NCUA, similar to the FDIC. Click on the link and it will walk you through a determination of what is covered - essentially the same amounts as the FDIC covers for bank deposits.
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Old 09-25-2008, 02:09 PM   #3
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Quote:
Originally Posted by Orchidflower View Post
REWahoo suggested in a post I had that the better place--other than a bank--for that loose cash would be a credit union. I know zip (and I mean zip) about putting money in a credit union. And, for some reason, I thought they were never FDIC insured. I must be wrong?
May I ask others who know more than me on this (which won't be hard): Would it be better to place your cash in a credit union or a bank (FDIC, of course, insured)?:confused:
If I were to place some cash in a credit union is there anything I need to know (i.e., is it FDIC insured and other questions)?

(Where are you now REWahoo when I need you?)
These days, most federally charteredcredit unions of any size are indistinguishable from banks:
- they offer savings (share) accounts, checking accounts, CD's (share certificates),car loans, mortgages, etc.
- as noted by the previous poster, they are insured to the same limits as the FDIC does for banks, albeit by a separate government agency.
- they offer credit and debit cards, lines of credit accessible by writing special checks, etc.

I have used the Navy Federal Credit Union as my primary "bank" for well over 20 years. I've had 3 separate mortgages with them, buy CD's (share certificates) from them when the interest rates are better than bank rates, have debit and credit cards with them - the full range of "banking" services.

I only use real banks for two purposes these days:
- to buy CD's when their rates are better;
- to keep a small local savings account so I have a place to withdraw money immediately from in an emergency and to be able to cash (credit union) checks since I am a depositor there.

Also, more and more credit unions are now parts of networks where you can use their cards for free at bank ATM's. For example, NFCU cards can be used at KeyBank ATM's with no service charge.

For those who are eligible (I am but don't need to join another CU), I hear the Pentagon Federal Credit Union (PenFed) is also an excellent credit union.
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Old 09-25-2008, 02:16 PM   #4
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For those who are eligible (I am but don't need to join another CU), I hear the Pentagon Federal Credit Union (PenFed) is also an excellent credit union.
Anyone is eligible to join PenFed CU by paying a one-time $20 fee to become a member of a qualifying organization. See item #6.
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Old 09-25-2008, 02:27 PM   #5
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I've been a member of a local credit union since I was 16, currently 29. As a result, I didn't even know that people were charged fees at financial institutions until recently. Also never heard of "points" until recently as they don't exist at credit unions. At least around here, credit unions are a better deal with no fees and better(usually) rates on all accounts.
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Old 09-25-2008, 03:00 PM   #6
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I have dealt with banks, thrifts and credit unions and have had good (and not so good) service at all of them. I think it really comes down to the individual institution rather than what their charter is. I like Pen Fed (credit union) quite well. But I also have had excellent experiences with Schwab Bank (broker-affiliated bank), Commerce Bank (commercial bank) and Astoria Federal Savings (thrift). I usually pick who to deal with based on price and convenience.
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Old 09-25-2008, 03:44 PM   #7
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Originally Posted by Orchidflower View Post
May I ask others who know more than me on this (which won't be hard): Would it be better to place your cash in a credit union or a bank (FDIC, of course, insured)?:confused:
If I were to place some cash in a credit union is there anything I need to know (i.e., is it FDIC insured and other questions)?
Since the credit unions are insured by NCUA, their CDs are as safe as bank CDs. Of course I realize that this may not be as safe as some people think.

Since credit unions are non-profits, they're easily able to offer higher CD rates than most banks. In fact when I'm pitting NFCU & PenFed against each other for my business, the banks aren't even in third place...
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Old 09-25-2008, 04:22 PM   #8
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So here's a plug for Credit Unions, NFCU in particular.

Right now NFCU offers a 4 pct/15 month CD, the local bank I (used to) use best shot against this was 3.5 with a hefty minimum; when I closed my accounts there last week the bank hit me with a 25$ fee for "maintenance". Almost thirty years at NFCU and never a single fee.
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Old 09-25-2008, 04:43 PM   #9
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Can anyone join a Naval credit union? If so, it is like the electrician's union here then (I swim with a retired electric company guy who used to climb the poles, and he told me all about it today after I posted this).
So, am I gathering I can join just about anyone's credit union? Right? Hope so...and I had no idea whatsoever. Cool!
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Old 09-25-2008, 04:45 PM   #10
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Originally Posted by Orchidflower View Post
Can anyone join a Naval credit union?
You can if you play your cards right!

(Remember, you were the one who said you could take a joke...)

Actually, each CU has it's own rules for who is eligible for membership. Some open to anyone in a particular geographic area (a city, a county), others are very strict and limit membership to a narrow group.
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Old 09-25-2008, 04:48 PM   #11
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Most credit unions have really relaxed their membership requirements. They used to be required to service only particular segments, like teachers or employees of a particular company. Now membership in one group or another will often give you membership rights to the credit union.

Its slick enough that many of them offer a single page account sign up sheet that lets you sign up for the membership group AND open an account at the same time.
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Old 09-25-2008, 05:30 PM   #12
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Our credit union is actually overcapitalized. Too many savers and fewer borrowers. Related to a large corporation in a very stable midwestern location. Very rational lending standards.
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Old 09-25-2008, 07:08 PM   #13
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I recently purchased a 15 month CD from my local bank with a 3.75%APY. Out of curiosity I checked the PenFed site and they currently show a 2 year Money Market Certificate at 3.25%. Aside from the lower rate, what concerns me is the fact that they call them "Money Market Certificates". I don't know what if any difference there is between a CD and a Money Market Certificate, but in the current enviorment I will pass on anything with "Money Market" in the discription.
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Old 09-25-2008, 09:14 PM   #14
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I recently purchased a 15 month CD from my local bank with a 3.75%APY. Out of curiosity I checked the PenFed site and they currently show a 2 year Money Market Certificate at 3.25%. Aside from the lower rate, what concerns me is the fact that they call them "Money Market Certificates". I don't know what if any difference there is between a CD and a Money Market Certificate, but in the current enviorment I will pass on anything with "Money Market" in the discription.
Money market accounts in an NCUA insured institution are insured, IIRC. This pub will tell you for sure: National Credit Union Administration - Share Insurance
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Old 09-25-2008, 09:43 PM   #15
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I was surprised when I shopped for the mortgage we got on our home 5 years ago. Our biggest local credit union had slightly higher mortgage rates than USAA Federal Savings Bank. We had other accounts at USAA, so we went with them for the mortgage, too. I would have guessed that the CU would have a lower rate. Maybe now with a tightening up of mortgage-backed securities money this will change and credit unions, using deposits from their own members to fund the mortgages, will be cheaper.
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Old 09-26-2008, 07:32 AM   #16
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Okay, REWahoo, I can join the NCU as I do have a navel.
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Old 09-26-2008, 09:31 AM   #17
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