Why Banks are More Secure Than Credit Unions
When deciding where to put your money, you have a number of options available to you. Banks have long been the preferred solution for many because they are safe, reliable, and always available. Credit unions do have some key features that make them attractive to some people. However, for most individuals, the traditional bank is the best option. While one of the key benefits of a credit union is its small-town feel and a one-on-one personal touch you can enjoy, your small community bank can offer the same exact benefit.
Are Credit Unions Safer?
When choosing any type of financial institution for your money, the most important question to ask is about safety. But how is your money protected?
Look for an FDIC insurance notification from the bank or credit union. In all cases, this is the true component that can help you determine the safety of any financial institution. This key detail lets you know your money within that bank is backed by the federal government up to $250,000. If you think back to the Great Depression, you may remember hearing stories of banks running out of money, causing customers to lose their life savings. This is no longer possible when you choose an FDIC-insured provider.
It is important to note that not all credit unions offer this type of security — and that is where you may run into safety concerns. No matter which financial institution you select, be sure it is FDIC-insured so that it provides you with ample safety. Remember, some credit unions do not have this federal insurance. While the organization could still be safe, it lacks the financial backing of the federal government and that does pose a bigger risk to you.
Why Banks Protect You
There are many ways to ensure your money is safe. For example, the larger value of most traditional banks gives them the ability to have more protection in place — that is, they have enough funds available that they can instantly meet any financial need you may have. At the same time, you also want to ensure the location you choose is financially stable. You do not want to bank with an organization that is struggling financially itself — that leaves you at risk.
If you are trying to decide between a bank or a credit union when choosing a financial institution, both might have appeal. But remember to determine what type of backing they have. A small bank will be FDIC-insured, but not all credit unions carry this promise. It’s up to you to verify the security of any financial services provider. A great place to start is by reviewing free bank and credit union ratings online.