Safety: The US bailout plan lifts the federal insurance level for both banks and credit unions to $250,000 per account, up from $100,000 per account. Coverage for credit unions is provided by an insurance fund run by the National Credit Union Administration. The Federal Deposit Insurance Corp. insures bank deposits.
There's a common misconception credit unions aren't insured. Fewer than 200 are not federally insured. The NCUA's website, www.ncua.gov, lists credit unions that are government-backed.
Rates: Credit unions generally offer more competitive rates on savings accounts, CDs, and other products, and they may have lower ATM or overdraft fees. But that doesn't mean you'll always get a better deal.
"If you're going to get the best deal, you've got to cast a wide net," said Greg McBride, senior financial analyst at Bankrate.com, which lists the rates on numerous financial products. The site also surveys the 50 largest credit unions each month on rates for car loans, 1-year CDs, and 30-year fixed mortgages.
Services: In general, banks offer a wider menu of services, such as portfolio management and commercial banking, and have more branches and ATM locations. Joining a credit union doesn't necessarily mean sacrificing convenience, however. Many are part of "shared branching networks," meaning members can drop in at multiple locations around the country to make deposits or withdrawals. About half of credit union members have access to other credit union branches through a shared network, according to the Credit Union National Association.
The bigger the credit union, the more likely it is to offer services such as credit cards, mortgages, ATMs, or online banking. Many credit unions are also part of ATM networks. Members typically don't have to pay fees to use them.
Loans: It may be easier getting loans from credit unions these days, since they were less affected by risky mortgages. Credit unions generally did not push subprime loans.
People shouldn't run into any trouble getting loans at community banks either, however, said John Hall, of the American Bankers Association.
As with other financial products, rates on loans are typically better at credit unions. The difference is most apparent for car loans or credit cards, and varies less for mortgages, said Jim Hanson, vice president of personal finance for CUNA.
