What was the very first
financial choice you ever made? Think about it.
It likely took place
before your first job, even as far back as when your annual income consisted
of Tooth Fairy money and
lucky pennies. The very first financial decision you ever made is also
one of the most important
choices, it’s where to keep your money.
When you first made that
decision, piggy banks, sock drawers, and “buried-in-the-sandbox-like pirate-treasure” all seemed like
perfectly acceptable options. As it turns out, they aren’t nearly as super-secret as you
might have hoped. Opening a bank account is the best solution, but in order to do that you first
need to choose a financial institution—and so the choice becomes “bank or credit union?”
Banks and credit unions
offer essentially the same products and services, but there are huge differences in the way
they operate. Despite this, many people put more thought into building their Netflix queue than
they do choosing their financial institution. It’s a Money Thing is here to help fill in the gaps and
show you how the differences can affect your dollars. Whether you’re just starting out or
rethinking your current financial setup, here is what you need to know.
The main difference
between banks and credit unions is in their structure. Banks are for profit, while credit unions are
member-owned and operated. This means that banks have numerous expenses that credit
unions simply don’t have. Banks have to pay their shareholders, their private investors, and even their board of directors (credit union boards are typically volunteers elected by credit union
members)—and all this is in addition to regular operating costs. Banks are set up in a way that
allows a select group of people to make money off of your banking activity.
Credit unions, on the
other hand, are set up in a way that allows all of its members to benefit from its profits. Once its
operating costs are covered and reserves are set aside, the profits are distributed back to
members in the form of free banking products, lower interest rates on loans and higher interest rates
on savings accounts. Credit unions in the United States are also exempt from federal and
state income taxes which translates to even more profit that comes back to members.
Credit unions sound pretty
great, right? You might be wondering why some people choose banks over credit unions,
even though credit unions consistently outperform banks when it comes to deposit and loan
rates and customer service.
The simple answer is that
banks are bigger, and some people believe bigger is better. A better approach is to find out
what your banking priorities are. Here are some factors to consider:
certain community or
working in a certain field. For example if you live or work in Miami-Dade, Broward or Palm Beach County - YOU ARE ELIGIBLE to join Tropical Financial Credit Union!
2)
How much does it cost to get set up? Are there any fees associated with opening an account? Is there a
minimum balance required? Joining a credit union involves purchasing a share (at Tropical Financial Credit Union it's only
$5), but this is different from a fee, it means that you’re a member-owner of the credit union.
3)
Will I have good access to ATMs? You might feel as though you see larger bank ATMs everywhere, but credit
union ATMs are just as accessible. In fact, the largest credit union ATM
network is actually larger
than the largest bank ATM network. Find out what other financial institutions share your
local credit union’s network. Free ATM transactions are not limited to machines with a particular
credit union name on them.
4)
What can I do online? More and more financial institutions are offering
online banking services. Find out what
you can do from your computer and smartphone. Can you check your balance? Schedule
payments? Transfer money between accounts? Taking advantage of online products can be super
convenient, and save you from taking a trip to the ATM or to the nearest branch. At Tropical Financial you can take your credit union with you wherever you go on your mobile device! With our mobile app you can deposit checks by taking a picture, check balances, transfer money and even add and pay your bills!
5)
And speaking of the nearest branch, where is it? Find out what the hours of operation are and how they work with
your schedule. Find out if you can bank through other branches, too. This could come in handy
if there’s a location close to work or school.
6)
What can my financial institution do for me? Ask about products that
are tailored to your
situation. How do the
interest rates compare to other financial institutions? Are there free products you’re eligible
for? Don’t settle for a financial institution just because you need an account. You should want
to have an account there, too. At Tropical Financial we have different checking accounts to fit different needs - for the 25 and under crowd there's the Gen Next checking set up with extra benefits for those just starting out.
At the end of the day,
choosing a financial institution is a personal decision with a huge influence on how you
manage your money and your time. If you take some time to ask questions and compare services, you’ll find the best home for your
finances.
^Alysha
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