After bankruptcy establishing a positive relationship with different types of creditors, banks and credit unions, is important. The dilemma, I am sure many of you are contemplating is, “which one is best for me?” The answer to this is not generic, and thus unique to everyone, requiring you to assess and understand your financial goals. Discussed below are different factors to consider when trying to decide between the two.
Bank or Credit Union: A Check List for You
- Mobility and Ease of Access: Do you find yourself traveling a lot out of state, or out of town? Or maybe you are the person that frequently uses ATM machines. If this is the case, you need to consider the fact larger banks are going to grant you more mobility and access to your funds. Major banks also usually have more of a physical presence, so this makes finding one easier. Many credit unions do have sister branches that you can access while out of town, they just won’t be as convenient to find as the branch of a major bank.
- Rates, Fees, and Interest: Most credit unions will have lower interest and service fees, as opposed to major banks. While major banks are likely to offer better rewards programs for their cards. So, what you intend on using their service for should stipulate which one is best for you.
- Checking and Savings Account
- Bank: will offer anyone checking and savings accounts. Wherein the checking account will give you quick and easy access to your funds and the savings account will allow you to earn interest. The savings account is likely to have a required minimum balance, and the checking account will charge overdraft fees.
- Credit Union: are known for their low-interest rates on loans; and minimal fees regarding: overdraft, checks, ATMs, and electronic transfers. While offering higher interest rates on savings accounts and CDs because profit in a Credit Union is shared among the members.
- Mortgage or Loans: If you are looking for either a car loan or a mortgage for your home in the future, establishing a relationship with a credit union will give you an advantage on lower interest rates. However, if you are not eligible for a credit union establishing a relationship with a bank will also be beneficial to you during the loan seeking process.
- FDIC and NCUA: You need to make sure that before starting any savings account that either the bank or credit union is insured by, the Federal Deposit Insurance Corporation (FDIC), or the National Credit Union Administration (NCUA). Both programs offer federal insurance on savings accounts of up to $250,000.
- Membership:
- Credit Union: The credit union will only offer account privileges to what they call members. To become a member, you need to fall into a required group of people. Typically, membership eligibility is decided by the employer, geographic location, family, or group membership such as a church or labor union.
- Bank: Banks are usually open for service to anyone that wants to establish a savings account, which is usually required for a checking account.
Weigh Your Pros and Cons
Becoming a member of a credit union can be difficult after bankruptcy, however, that is not to say it is impossible. If the low-interest rates and fees seem appealing to you, and you plan on creating a savings account and the higher rates of return sound good you might want to become a member with a credit union.
In contrast, many major banks also offer great savings account opportunities and if you start accounts with them, over time requesting for different lines of credit will be easier.
Ultimately, after you know what you want the best direction is then to go and sit down with representatives at different branches, see what they have to offer you. Just like when you are buying a car, remember not to sign up for the first account you are offered. If you are confused or feel pressured, sleep on your decisions, or discuss it with close friends and family. Make the right logical decision for you! This is your money and your future, and no one should make a decision for you that you are not comfortable with.
