8 Questions to Ask before Opening a Bank or Credit Union Account
As of March 2021, there were 4,978 banks and 3,209 credit unions nationwide. So you have lots of options of where to manage your money, but which should you do business with? Both banks and credit unions offer financial products that include checking and savings accounts, and loans, but they do have two major differences.
The first is that banks are for-profit corporations, owned by stockholders. Credit unions, on the other hand, are non-profit cooperatives, owned by the members. The second difference is that banks serve the general public, and anyone can open an account with one. With credit unions, due to a federal statute (12 U.S. Code, Chapter 14), you must be affiliated with a particular employer, association or community organization (such as a church or social group), or be a family member of someone who falls into that category. There are some exceptions to this however. If you work or live in a particular area, you may be allowed to join a community credit union, so be sure to ask, if there is a particular credit union that you are interested in.
Whatever institution you choose, make sure to ask these questions about their checking and savings accounts:
- Is there a minimum balance requirement to avoid a monthly fee? If so what is it?
- How soon is my money available after I deposit it? (Both banks and credit unions can put holds on large and sometimes even small deposits).
- Do I need to open a checking account or some other account to have a savings account?
- Is there a limit to the number of withdrawals I can make each month from my savings account?
- What fees are associated, if any with a savings account?
- What fees are associated with credit and debit cards issued by the institution?
- Does the institution offer online banking and if so, is there a fee to use the service?
- Are there fees associated with ATM withdrawals?
Also, pay special attention to any fine print on any documents that you sign. Very often, we ignore the fine print, which is where much of the information about fees is located - so don’t ignore it. For information on how to minimize bank fees, visit the American Bankers Association.
Whichever financial institution you decide to choose to manage your finances, be sure that it is insured. Federal credit unions should be insured by the National Credit Union Administration (NCUA) and banks by the Federal Deposit Insurance Corporation (FDIC). If you don’t see this posted at the bank or credit union you are thinking of joining, you may want to first do some research on that financial institution. For more information on credit unions, visit the Credit Union National Association (CUNA).
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