What was the first financial decision you ever made?It likely took place before your first job, before you started getting a weekly allowance, or even as far back to when your annual income consisted of Tooth Fairy money and lucky pennies. The first financial decision you ever made was probably where to keep your money. Show
When you first made that decision, piggy banks, sock drawers and treasure boxes all seemed like justifiable options. As it turns out, they aren’t nearly as secret or secure as you might have hoped. Putting your money in an insured account is the best the solution, but in order to do that, you first need to choose a financial institution. Whether you’re new to banking or feel the need to make a change, there are a lot of factors to consider when deciding which financial institution to go with. So what should one look for? Choosing the right one starts with knowing your bank usage and individual preferences. Here are six factors to consider when choosing a financial institution: SecurityThe whole point of putting your money in the bank is to keep it safe, right? If you’re worried about what could happen to your assets if the bank were to go belly-up, you need to choose an institution that is protected by the government. Generally you want to make sure the bank or credit union you choose is insured by the Federal Deposit Insurance Corporation (FDIC) for banks, or the National Credit Union Association (NCUA), for credit unions. Do not use a financial institution that does not have these protections; you want to make sure your money is secure. ConvenienceKnowing your money is safe in your account doesn’t count for much if you have trouble accessing it. Making sure your financial institution offers convenient options is important, because let’s be real, time is money. So whether it be accessing your account through online banking, a mobile banking app, or banking at a physical location, you want to make sure that whichever way you prefer to do your banking, it’s convenient for you. RatesInterest rates work both ways: the rates you receive on money deposited should be as high as possible while keeping the liquidity you need, and rates you pay when borrowing via a credit card or loan should be as low as possible without having compromised service and options. Credit unions, as not-for-profit, member-owned institutions, may have higher APYs on deposit accounts and lower fees and loan rates than traditional banks. FeesBefore you open any account, you should ask to see a complete fee schedule. Depending on the institution, the types of fees you can expect may include: an account opening fee, check writing fee, monthly maintenance fees, minimum balance fees, online or mobile banking fees, bill payment fees, transfer fees, overdraft fees, etc. Fees can add up quickly, so make sure you are aware of any costs associated with an account. TechnologyAccording to Pew Research, nearly nine-in-ten Americans today are online, and 77% own a smartphone. With the increasing number of connected users, online banking features can be crucial. Your financial institution should provide innovative technology, including the latest options, such as mobile apps, online business account access and mobile banking services. Good technology can help you stay on track with your money. Determine the must-have technology features you would use. This can help narrow down the list of suitable institutions. Customer ServiceWhen you have a problem or question, the last thing you want is to sit on hold or get a customer service representative who is unhelpful or rude. Ask around to find out which banks or credit unions make your friends and family happy. At the end of the day, choosing a financial institution is a personal decision that has a big influence on how you manage your money and time. If you make the effort to ask questions and compare services, you’ll find the best home for your finances. The information provided is general in nature and may not apply to your specific situation. MCCU does not provide tax or legal advice. Please consult with your personal financial advisor. « Return to "Blog" Go to main navigationPublished by 121FCU on Sep 12, 2019 9:52:00 AM When deciding how to choose a credit union, determine the products or services that mean the most to you. Credits unions are known for their lower rates and fees, superior customer service and better loan approval odds. This blog will explore the top 10 factors to consider on how to choose a credit union, along with the many other reasons to join a federally-insured credit union. How to Choose a Credit Union: Top Ten Factors to Consider1. Rates and FeesCredit unions (CUs) offer lower rates and fees on most of their products. Some examples include: Lower loan interest rates – credit unions offer lower interest rates on many types of loans. This includes car loans, unsecured personal loans, home equity loans, small business loans, and mortgages. The National Credit Union Association (NCUA), an independent government agency tasked with overseeing federal credit unions, provided a breakdown of various loans and mortgage rates – with figures supplied by the S&P Global Market Intelligence as of June 28, 2019. As an example, the study found that CUs offered 15-year fixed-rate mortgages at 3.63%. In contrast, banks provided a rate of 3.84%. Credit unions also provided lower rates on adjustable mortgages and home equity loans. When approving loans, CUs take deposits from other members to help you qualify. In addition, they use the earned interest to provide lower fees to other members. Lower minimums and fees – credit unions provide various types of checking and savings accounts. Many have lower fees and minimums when compared to traditional banks. You may find some products do not assess any fees. Lower credit card rates – the same study also compared the national average for credit cards. For a standard card, CUs offered an annual percentage rate (APR) of 11.80% compared to 13.61% for banks. 2. Outstanding Customer ServiceCredit unions put member needs above profits. They know that members become an owner when they join. By taking the time to get to know their members on an individual level, CUs gain the ability to offer products specific to a member. Several studies showed that CU customers felt more comfortable discussing their needs with a credit union staff member when compared to a bank employee. Furthermore, CUs help all of their members save money, regardless of income, or how much money they deposited into an account. 3. Community Focus of Credit UnionsCredit unions by design serve the needs of everyone that make up a local community. In fact, sometimes the only criterion to join a CU is to live in a particular area. The focus on superior customer service complements the community-first approach. The smaller nature of CUs also provides an advantage because they are only accountable to their members. Credit unions make it a priority to find the most affordable products for their customers. 4. Apps and TechnologyCredit unions offer many features that banks do. They both offer free online bill pay, mobile alerts, and deposits. While national banks have more money to invest in the mobile experience, CUs are catching up in this area. Additionally, you must look at technological capabilities within their proper framework. Improving the mobile experience makes sense for CUs because it provides another way to focus on end-user needs. Additionally, focusing on improving networking conditions and the overall speed of browsers and devices complements the goal of meeting the needs of all members. For the remainder of the year – and throughout 2020 – expect credits unions to deliver better web-based and app experiences. 5. ATMs and Branch LocationsMany credit unions participate in a CO-OP network, also referred to as a shared branch. This network remains the second-largest branch network throughout the United States. The network is comprised of locations that allow members to perform the same transactions at other branches, or use their ATMs without incurring any fees – just like they would at their regular CU. Currently, more than 5,600 locations exist throughout the United States. You should have little difficulty finding a branch near your home, when you travel, or if you move. CO-OP shared branches also offer:
6. Security and InsuranceWhile the FDIC insures bank deposits of up to $250,000, this government agency has no jurisdiction over credit unions. This fact should not discourage people from joining a credit union. Most CUs provide the same type of protection and security, but from the NCUA. The NCUA also administers the National Credit Union Share Insurance Fund (NCUSIF), which insures deposits at federal CUs for up to $250,000 – the same amount as banks. When researching how to choose a credit union, use the tool provided by the NCUA to check for federally-insured ones. If you decide to visit a credit union before making a decision on which one to join, you have an easy way to tell if you walked into a federal CU. All federally-insured CUs must display prominent signage throughout the location. Additionally, by law, CUs cannot terminate federal insurance without notifying its members first. Credit unions could be regulated by the state in which they reside. These types typically use private insurance to cover member deposits. While some may have government protection, not all do. You should always use the NUCA locator to check. 7. Assess Your NeedsBefore making a final decision, rank which products are most important to you. In the case of loans, credit unions usually offer lower interest rates, fees, and terms. Furthermore, CUs will work with those who have fair to poor credit. In contrast, national banks prefer to work with people within a prime category – those who have a credit score of 750 or more. Car loans make up about one-third of CU business. Credit union car loans are usually at least 1% to 2% lower than other lenders. As of November 2017, the Credit Union National Association (CUNA), an advocacy group, reported that new car loans increased by 14.3%. The CUNA finding also showed that loans for used cars during that period increased by 11.2%. Also, take into consideration that banks place more of an emphasis on large business loans as they have to report back to outside shareholders. Credit unions fill a gap for small business owners. They place member needs above profits, so you stand a better chance of getting approval. While fewer people applied for business loans as of 2017, applicants achieved higher approval rates. A Federal Reserve survey reported that in 2017, 40% of people applied for business loans. A misconception exists that CUs do not offer small business loans. This could account for why only 9% of people sought a CU business loan. However, in 2018, credit unions reported over $71 billion in commercial loans. Additionally, the U.S. Small Business Administration (SBA) reported that as of October 2017, around 200 credits unions participated in one of the SBA guaranty programs – guaranteed loans designed to help small businesses. More good news is on the way for small business owners. On April 30, 2019, the NCUA partnered with the SBA. They created a three-year program designed to bring together small businesses and CUs. 8. Check EligibilityThe law requires that CUs define their "field of membership." This simply means it outlines the group of people they wish to serve. Many credit unions do not have strict requirements. Because CUs serve the city or town you live in, when they open, they already serve the local community. The NCUA defines these as community credit unions – by simply living in a specific area, you have already met the requirement. You may view all NCUA credit union categories here. Some sample criteria below include:
9Other Membership BenefitsAfter analyzing your needs, you should review all the additional benefits. You will likely require other products or decide to make a CU your primary financial institution. Some credit union perks include free mobile banking, alerts and overdraft protection – similar to what banks offer. However, banks cannot compete with the individualized customer service CUs provide. Other credit union benefits include:
10. Check the Initial Deposit AmountWhen opening an account, most credit unions ask that you make a small deposit of up to $25, and you pay a one-time membership fee. The deposit amount is much lower than most banks, and many accounts do not require that you keep a minimum balance. Even a small deposit helps other members. All profits find their way back to members in some form including dividends and lower rates and fees. We hope this information has helped you learn how to choose a credit union. Always remember that credit unions take profits and reinvest them into their products and services. The growing partnership with the SBA shows their commitment to helping small business owners too. What is the most important factor to consider when choosing a bank or credit union?The two factors we've considered so far—the type of institution you choose and the amount it will cost you in fees or lost interest—are the most fundamental aspects of choosing a bank. However, most banks will also offer a range of other services, discounts, or features that may be crucial for you.
What are some things you should consider when choosing a bank?What to Consider When Choosing a Bank. FDIC or NCUA Insurance.. Bank Reputation.. Online vs. Traditional Bank.. Mobile and Online Banking.. Branch Locations and ATM Access.. Account Types Offered.. Interest Rates.. What are the important things to consider when choosing a bank or credit union quizlet? Convenience.. Fees.. Interest rates.. Deposit insurance.. |
What are the important things to consider when choosing a bank or credit union?
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