Bank or Credit Union? How to Pick the Best One for You

Whether you are looking to open your first savings account or take advantage of a loan from a financial institution, it can be difficult to decide between a bank and a credit union.

Both offer different services and products with varying fees and interest rates, so it’s important to know what sets them apart to make an informed decision. 

Let’s look at some differences between banks and credit unions that can help you pick the best one for your needs.

Services Offered by Banks and Credit Unions

The first difference between banks and credit unions is what they offer. Banks have more services than credit unions typically do. 

This includes investment options such as CDs, bonds, stocks, mutual funds, IRAs, and other products that allow customers to diversify their portfolios. 

Credit unions, such as Credit Union of Denver, usually don’t offer these services; instead, they focus on loan products such as mortgages, auto loans, personal loans, and business loans.

Fees

Another major difference between banks and credit unions is fees. Generally speaking, banks charge higher fees than credit unions do for their services. 

This includes ATM fees if you use an outside networked machine rather than one from your financial institution. Additionally, many banks will charge monthly maintenance fees on accounts with low balances or require minimum deposits for certain accounts that may not be required at a credit union.

Interest Rates

Finally, banks tend to have higher interest rates when it comes to loan products like mortgages or car loans compared to those offered by credit unions. 

Credit unions often have lower interest rates because they are non-profit institutions owned by members rather than shareholders who expect profits in return for their investments. 

Of course, there are always exceptions depending on the financial institution. However, this is generally true across the board when comparing banks versus credit unions regarding interest rates.

In conclusion, both banks and credit unions have their own unique set of benefits that make them attractive options when choosing a financial institution for your needs. 

It's important to consider all of the factors discussed here before making a final decision about which type of institution is best for you—from services offered to fees charged—as well as any other additional features or policies that may apply at either type of establishment. 

Ultimately it boils down to finding the right balance between price and value that meets your individual needs.

Is It Better to Get a Home Loan From the Bank or a Lender?

When you are ready to buy your home, there will be plenty of choices. The two most common options to finance your home are non-bank lenders or large banking institutions. However, each of them has some differences, and your choice could depend on what's important to you. Learn more about how they differ below.

What is the Difference Between a Bank or Mortgage Lender?

Either a bank or a lender can help you get the funding to secure your new home. The applications will depend on credit, income, and debt qualifications. However, there are some critical differences between the two.

Mortgage lenders have several loan options, while banks have fewer options. Also, banks will usually have tighter credit requirements. It's common for mortgage lenders to sell your loan to another lender after closing. Home loans can be secured with either option, but you should consider how they differ.

No matter who you choose, having a decent credit score can only help in your effort to secure a loan, whether it be through a lender or a bank. 

If you’re unsure of your credit score or how it would perform, you’ll want to focus on increasing your score to at least 700 or higher. In fact, if you were able to get a score of over 800, you could likely get yourself a better interest rate.

How to Know Which Is Right For Me?

There are some pros and cons to each option. Let's start with banks. Banks generally have lower interest rates and will continue to service your loan after closing. Also, they may offer special rates if you already have other financings through them. Banks typically try to promote better loan terms and products to maximize their revenue.

Some cons to bank lending include having stricter lending standards, more fees, and longer closing times. One of the more challenging pieces of a bank loan is getting approval. It's generally more difficult to qualify for a bank loan, and the process takes much longer.

Mortgage lenders have many pros, including more options, quicker loan closing, and may be more willing to negotiate the terms. However, some cons include the servicer selling your loan to another lender after closing, meaning you can expect changes to how you’d pay your loan to the new lender.

Lenders and banks both have their advantages and disadvantages to offering loan services. Thus, it's best to shop around and determine which option is best for you. You can get quotes from several different lenders and banks and compare rates, terms, and closing costs from each. Ask lots of questions to understand your agreement.

Of the People for the People: When Banking Goes Social

Social media has come a long way, baby, over the past decade. Analyzing the already (in) famous case of Facebook alone will reveal a spectacular tale of a brainchild born out of the enthusiasm of three Harvard dropouts. What started out as a basement dream evolved into a social network especially devised for students and alumni of Ivy League colleges, which then expanded across colleges in the United States and eventually took over the whole world. Nowadays, there is little people don’t do on Facebook. They chat, keep friends, family, and acquaintances updated of their personal status quo and whereabouts – and, more recently, they’ve also started taking their banking to new social level. 

Of course, this latest revolution is inextricably tied in with the mobile revolution, in which both technology and IT savvy have a lot to say for themselves. Over the past year, the US market reach and share of smartphones has increased to great extents and the latest polls in the field indicate that it will only continue along the same lines in 2013. Not only are more and more people online, but the range of actions they perform on their mobile, online-ready devices is also becoming more and more diverse. Supremacy belongs to game playing, which has surpassed, in terms of time spent at play, the time people spend playing video games on their desktop devices. Online and social banking, however, is also undergoing a quiet revolution of its own. 

Two of Australia’s Leading Banks Go Social

Bankwest is one Australian bank that realized the catchphrase according to which ‘you don’t exist if you’re not on Facebook’ is truer than they may have initially thought. At http://www.facebook.com/bankwest they’re keeping clients informed, both current and prospective ones, of all the bank’s activities outside the main institution’s premises. Their strategy is personal and their approach light, as their profile is peppered with pictures from recent social events, organized in support of the bank’s many social initiatives. Bankwest is one Australian bank which has been focusing on online presence more so than others in recent times – their online savings, credit card, and personal loan deals often come with better terms than their offline counterparts.

Bankwest is not the only online Aussie bank either. Another major competitor on the market has recently launched a marketing campaign aimed at informing clients of the many services they offer online. These range from enabling payments via mobile, to dedicated smartphone apps for people seeking to purchase a new home. According to the bank’s representatives, their latest campaign is about improving the bank – customer relationship, and not about “technology for technology’s sake”. The decision to go online and implicitly social was marked by the bank’s desire to stay on top of its game, to improve the way banking was viewed and to provide a higher-value experience for the end-user. 

What’s in it for the Banks?

As the latter example goes to show, taking a banking enterprise online and helping it stay connected with its clients through multiple channels is not about being ‘trendy’. It’s the next logical step in an approach that is firmly rooted in the traditions of the banking industry. Back before the global financial crisis, and even further back in time, during the fifties, sixties, and seventies, banks were perceived as more ‘humane’ and implicitly human than they are now. The GFC changed all that, as many institutions across the world tumbled toward their inevitable end, fueled, it seems, by a lot of inhumane amassing of capital. Current attempts at socializing via the newest means available are, by the looks of it, an attempt of making amends for the past decade. Time alone will tell if the general consumer public chooses to validate this attempt or dismiss it.

Living and Working in Egypt Provides an Opportunity to Save

English: The Nile River as it flows through the city of Cairo, Egypt. (Photo credit: Wikipedia)

Anyone moving from the United States to live and work in Egypt will notice almost immediately how the cost of living there is so much lower. Therefore, savings opportunities are easily possible. But, like anything else in life, opportunities have to be grabbed in order to turn them into reality and good savings habits are vital in this respect. For it's just as easy to blow your monthly salary living it up in Cairo as it is in the city of New York. 

It's no big deal opening a savings account in Egypt, providing you've lived in the country for at least a few months. The banks in Cairo or any of the other big cities and towns will certainly be happy to provide you with the same sorts of personal banking services that banks back home do. Thanks to the internet, it's a fairly easy matter to view available current accounts from HSBC, for example, or from any of the other multinational and indigenous banks operating in the country.

Pop into the nearest branch of the bank of your choice and fill in an account opening form. Staff there should be able to advise you about the interest rates offered by various savings accounts. You'll need to take along some official documentation, too, just as you would when opening an account back in the States. The process is fairly similar.

The sorts of documents required include your passport, work visa and your residency certificate. Take along a utility bill, too, to provide evidence of an Egyptian address. A letter from your bank back in the USA, confirming account details and the length of time you've banked with them, will also help with the application process. Some banks may also want to see the last three monthly bank account statements. Finally, take along a couple of passport-size ID photographs which will be used by the Egyptian bank for record purposes.

So how better off are you likely to be living in Cairo instead of New York? For this far from in-depth comparison, let's assume at the very least the salary earned living in either city is about the same. All the comparison figures come from the excellent website Numbeo.

In broad-brush terms, consumer prices in New York are more than twice that of Cairo. Include rent in the figure then the differential rises by over 200%. A straight rent price comparison between the two cities sees the figure jump to nearly 600%. Restaurant prices in New York are about 140% higher and groceries about 125% higher. Opportunities to save? You'd better believe it.

A meal at an inexpensive restaurant in Cairo will likely set you back about $5; the equivalent figure in New York is around $13, a 162% difference. A Coke or a Pepsi will cost you $0.49 in Cairo and $1.50 in New York. There's a 500% difference in the price of an average bottle of water. In Cairo it costs about $0.25, while in New York you'll pay about $1.50.

There's a 200% difference in the cost of a loaf of white bread. A packet of cigarettes costs about $2.10 in Cairo and more than $12 in New York. Local transport costs are also much cheaper, the equivalent monthly pass costing about $13 in Cairo and more than $100 in New York. Basic utilities such as electric, gas and water are also so much cheaper in Cairo. Expect a difference of about 400% between equivalent-sized apartments.

Click here to go to Numbeo.

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New July PowerPerks At PerkStreet Financial

Summers here and PerkStreet Financial PowerPerks took the fun path this month. Thinking you deserved a little relaxation for the hot summer months PerkStreet is going to give you back 5% when you purchase these cool summer treats. 

This months Powerperks that will give you 5% back in rewards are:

1. Ben & Jerry’s
2. Diary Queen
3. Cold Stone Creamery
4. Old Navy
5. Movie Tickets

Remember even if you don't get to use these PowerPerk companies you still receive 1% to 2% cash back rewards (depending on your balance) on all your regular purchases. I like using the PerkStreet Mastercard because unlike a credit card there is never an interest charge or a late fee. You get all the benefits of a credit card without all the negatives.

PerkStreet customers can earn 2% cash back on all non-PIN debit card purchases when they have a daily opening balance of at least $5,000 in their checking account. Customers will continue to earn PerkStreet’s standard 1 percent cash back on all non-PIN debit card purchases even when their account balance is less than $5,000.

PerkStreet has calculated you will get back at least $600 per year by using their account. There are no fees or long list of exceptions to gaining rewards.

Though the amount you can earn via regular rewards (1% or 2% depending on your account balance) is unlimited, the amount you can earn at the 5% cash back bonus rate is limited to $250 per household annually (starting on the day your account was opened). The total amount of cash back you can earn remains unlimited.

Sign up today for PerkStreet Financial and start earning rewards today!

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Why Use an Online Bank Instead of a Brick and Mortar Bank

Image via WikipediaThe main reason people don't use an online bank is that they are afraid of losing control of their money. This is simply wrong. An online bank will give you the same or added control of you money. If you have made a purchase online you have used the same process that online banks use. 


A credit transaction is basically a money transfer you are responsible for. You trust your credit card company to complete the transfer of money to the online store so you will receive your purchase through the mail. The online banking system uses the same transfers and safety protocols that the credit card companies use.

Everyday when I go to work I pass by my bank. The only time I stop by is to use the ATM. My income is directly deposited into the bank weekly. I never go in the bank. Over the last 15 years I have used this bank I have gone in 3 times. It's not necessary. All my transactions are done by computer. I check my balance, deposits, and my online billpay on my computer at home. If I need checks, I order them online and they are delivered by mail. There is no reason to go to the bank for anything but my ATM use.

Benefits to Online Banking.
Interest on your account balance. The bulk of brick and mortar banks give little or no interest. Online banks give over 1% interest and even more on their CD's. When you don't have a physical building to maintain and pay for you have more money to pay interest and give rewards on checking accounts.

Automation for your finances.
Automation of your finances means using the banks online billpay services. These free services allow you to pay your bills with a few clicks of your mouse. Billpay does all the work when paying your bills online. It's easy to set up. You can set up billpay to pay your bills for any day or any month way in advance. You can even set up billpay to pay your bills a year in advance if you wish.

Automation of your saving.
Just like setting up your bills to be paid online, you can set up your saving to be automatic. Set a weekly, bi-weekly, or monthly transfer of money to your savings account. You can even set up transfers to your stock and mutual fund accounts.

How to find an Online bank.

Google has an online comparison site that shows the details on different banking an saving accounts. Got to Google Comparison Savings Accounts to see what's available.

An online bank I use is PerkStreet Financial. PerkStreet Financial is the only checking account that has rewards for using your debit card. Customers have the choice of cash back, music downloads, or a free coffee. PerkStreets claim to fame is that just by using your debit card on just your normal purchases, you can easily earn $600 cash back every year.

Improve your financial life with the PerkStreet Financial^SM Debit MasterCard®. Save money, have fun and stay on budget with the only unlimited 2% cash back debit card. Don't miss out. Sign up today.

Why is My Saving Account Paying Me Such Low Interest?

While preparing my taxes I was gathering my interest 1099's from my bank. I noticed that I was getting a very low rate of interest on my savings account. I remember just a few years ago when I was receiving 4 % interest on a few CD's I had. Now, banks pay somewhere around 1% interest on a CD.

Why is my interest rate so low?

Banks take our deposits and lend the money out in the form of mortgages, car loans, and personal loans. Their gross profit is the difference between the loan rate and the rate they pay depositors on saving instruments. For many years this was a small amount on average. Today the margin is much larger. In 2007 a 12 month CD yield was 4%, now the best rate you can get is 1%. A Mortgage interest rate at that time was 5%. The bank's margins, were then less.

Since the financial crisis the Federal Reserve has set interest rates at nearly nothing. Banks are able to borrow the nearly free money and loan it out at 5% and higher. The banks are under no pressure to raise the rates they are paying depositors, because of the Federal Reserve policies of low interest.

The federal banking regulators say that doing this is a way of helping banks beef up their balance sheets. They want the banks to raise capital to cushion against losses. Bank's earnings are on the rise. The financial sector earned an average $3.39 a share in the fourth quarter of 2010 vs. $1.54 in the fourth quarter of 2009. In 2007, they were earning in the $10-per-share range. I believe for the foreseeable future we are going to enjoy many more years of 1% interest at our banks.

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