How Credit Unions Compare to Banks

Credit unions are a pretty unique financial institution, given that they operate as a not-for-profit. But are they better than the banks? And are they immune to the problems of the banking sector? We dive into it in today's episode.

00:00 - Intro
01:13 – What are credit unions?
03:41 – Why credit unions aren’t more popular
07:14 – Are credit unions immune to failure
07:51 – Advantages of credit unions
09:50 – Deciding where to bank

DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[ThePlainBagel]

Apologies for the re-upload; the original video had a copyright claim against it for the outro music, which used to be royalty-free

[n.hermann]

Using a credit union as my main financial institution is fantastic. I’ve not had any problems with branch locations because most things can be done online or at the co-op ATMs. It is great not having that “how are they screwing me over” thought fermenting in the back of my head.

[Quroe_]

You're right. Us Millenials didn't know what a credit union is. This was a lesson for me.

[andrewloach]

I switched over as soon as I learned what a credit union was. It's so valuable to have a financial institution that is looking out for your best interests rather than trying to profit off you in any way possible. The other day they called to recommend that I should move my savings into a high interest money market account while I was poking around mortgage applications, which is a terrific idea that demonstrates how they look out for you (a bank would be happy to hold on to that missed interest if I left it parked in checking for several months).

[creepinwhileyousleepin]

My dad got me a credit union account when I was a kid and they've been fantastic over the years. They gave me my first car loan at a really good rate. Waved overdraft fees when I was broke. Sent me a credit card with nice perks that's had the limit raised many times now. The teller service is always fantastic. I really feel sorry for my friends that bank at chase or boa lol.

[answerman]

I have been a credit union member for over 30 years, and used it exclusively for over 20 years. My "banking" needs are simple, and credit unions accounts are often fee-free. I use accounts at different credit unions to receive direct deposits and pay bills.

[mymax]

I used to work in a big national bank. I had several of their products. Not that I am retired, I use a local credit union. Everything you said about how they compare is accurate. But I much prefer my credit union at this point in my life.

[midimusicforever]

It's a bit strange in a way that the younger generation is losing grip on this, given how the sentiment against bank against that group is kind of... Negative, to make an understatement.

[Vysetron]

One often understated benefit of credit unions is that they typically offer more useful resources for first time borrowers (eg mortgage), local business owners looking for loans, etc. I don't just mean rates either, I mean education and assistance that would typically be hard to come by or unavailable through typical banks.

[ctds]

I worked in the credit union industry for 11 years, so I have always used them as my primary financial institution.

[atxcats]

We've been with a credit unionn for many years, and have been pleased with everything, especially the responsive customer service. Our particular CU has great online/mobile services, and I haven't had to visit a physical branch since 2018. They may not work for everyone, but they are worth a look.

[BlitzMachina]

This was freakishly timely, I recently moved to Tennessee which doesn't have enough Chase locations to service my banking needs, everyone here is with a credit union instead. Thank you mr. Bagel

[drleo]

I've banked with credit unions since university. The emphasis on member service has always been great, but years ago, it was a large hassle because the shared ATM and branch networks didn't exist yet, and on-line banking was still very new and limited. So it only worked if you lived and worked where the CU had physical presence.

Nowadays, though, I live a long way from the nearest branch of my credit union and it doesn't matter. Online banking, the shared ATM networks (including sometimes making deposits at ATMs!), mobile deposits, and the mail make it possible to do everything remotely.

It's unthinkable to me that so many people still bank with the large banks, especially with all the stories about how they try to rip their own customers off. Customers are really valuing the wrong things if their mobile apps or on-line banking being slicker is so much more important than not being predated on by your checking account, being nickel-and-dimed constantly if not outright defrauded. All you need is the $5 or $10 for the one share, and beyond that, no minimum balances and no nonsense. I'd rather keep my money at an institution that is clearly looking out for me and my money, not trying to pick my pocket when I'm not looking.

[angelod]

I do think credit unions are an underrated option that a lot of people don't explore. Like your local library!

[luisoncpp]

I'm a member of a Credit Union and until now, I thought it was a bank, overall I'm happy with it, I have never had any issues with them and I have never been charged any hidden fees.

[brentlicook]

Great work as always, I understand the world more when your videos come out! Thanks 🎉

[BayWulf]

For several years I dealt with only Large or Large “Community” Banks. Their fees kept getting quite out of hand and there really was no way to get assistance, help or information on a personal or small business level.
Credit Unions were problematic because they were very hard to access except by physically going to them and there weren’t many “branches”.
Now, Credit Unions have adopted many “Big Bank” aspects and have become much more User Friendly in the process.
As of about 8 years ago I found a CU that offered a VISA Bank Card (works like a CC everywhere), uses an APP for 24hr Online Banking Procedures (just like Big Banks), accepts Direct Deposit and makes and receives Transfers and recently added Check Deposit by Phone.
So it pretty much does EVERYTHING I’d want for Banking Services and I like the idea that my deposits are being used in My Community to help My Friends, Neighbors and Small Businesses.

[DasSmach]

I think it'd be worth it looking across the pond for this topic. In Germany there's something called "Genossenschaftsbanken" which are pretty similar to what you describe as a credit union, but established. They are regional but don't prohibit you from becoming a member for some arbitrary reason and most of them are united under one brand (VR Bank), which means they cooperate on stuff they can't really do on their own like offering a good online service.
For many people these kind of banks are used for their primary deposit and they're a core pillar of our finance system. Some say it's part of the reason why we took the 2008 financial crisis so well compared to other countries.

[BobfromSydney]

One issue with credit unions and building societies is that due to their smaller scale they aren't able to cost-effectively manage the technical side of all of the payment and transfer processes as well as a large bank does (due to economies of scale and technical know-how). There are banks that offer a service to credit unions where they share their back-office and technical services in exchange for a fee. In these cases the credit union is effectively outsourcing all the processing/back office work to a large bank, which then makes the profits on providing that service. Often this is not transparently notified to members of the credit union, who might be under the impression the work is done in-house.

[afr]

In the past, networks mattered more. Here in the US, it is extremely common for credit unions to reimburse up to a certain number of out-of-network ATM fees. With mobile check deposit, I haven’t actually needed to go to a branch for years.