Are there any real advantages to a bank over a credit union for an individual

[BigNik]

@Icerigger

Credit Union deposits are insured by NCUSIF which is like FDIC but in much better shape.

In your jurisdiction, perhaps.

In mine, they’re substantially less well-backed by, for example, the RBA or the Commonwealth Government.

So I hold to my point.

[whatami]

@IAmNotSpartacus

I believe you will find it more difficult to find credit at a credit union, relatively speaking, because of the tighter standards they must adhere to when it comes to making loans. Perhaps a credit card or something, certainly not a home mortgage.

There’s a very, very good reason that we are not hearing about credit union failures in the news on a weekly basis, and it’s because they don’t make (as many) bad loans (as banks).

Most banks aren’t going under because of bad home loans (well, not directly anyway). The majority of institutions that have been closed by the FDIC had problems due to investment in Acquisition and Development loans and construction loans (business loans). CUs for the most part are not allowed to do as much in the way of business lending.

And while we are not hearing about CUs failing every week, there have been a couple. Last year, some major corporate credit unions failed. Corporate credit unions take the excess deposit of other CUs and invest it… in, for example Mortgage Backed Securities. The Insurance Fund took a large hit and asked for a large line of credit from the US gov’t. I don’t believe they’ve drawn on it yet, but it is there.

@icerigger

Credit Union deposits are insured by NCUSIF which is like FDIC but in much better shape.

Credit Unions can also buy insurance from commercial entities and are not required to use the NCUSIF.

[psychonaut]

@Quintas

I currently use a bank for my checking and savings. I’ve looked a some of the credit unions in my area. Less fees, better interest rates. Am I missing something? Is there a reason I shouldn’t move to a credit union?

You must not live in Britain. Under UK financial services laws, credit unions are not allowed to pay interest on deposits. Since credit union members are also co-owners, the unions are are, however, allowed to pay dividends proportional to deposits. Depending on the credit union and its performance in the last accounting period, the dividends can be much, much larger than the interest you would have earned on your deposit in a bank. However, the dividend could be £0. So in the UK, you don’t put your money in a credit union if you want your chequing and savings deposits to make a guaranteed return at a fixed rate. If you’re willing to do a bit of research, though, you might find a credit union whose dividends tend to meet or exceed typical bank interest rates.