Online Banks Vs Credit Unions Vs Big Banks

Which is best financing institution for you? When it comes to selecting the best financing institution, there are many categories to choose from. But the reason entirely depends on the types of banking features and services you want. Below is a breakdown of these financial institutions and the reasons you may want to choose them or avoid them.

Big Banks

Banks are classified into four categories that include regional banks, big banks, direct banks and community banks. The category we are referring here is the Big Banks. This category features the big banking institutions such as Wells Fargo, Citigroup, Bank of America, and JPMorgan Chase. The main reasons why you should choose big banks is convenience and technology. Big banks invest more money in technology (e.g. mobile banking) than online banks and Credit Unions. Their physical presence is widespread in terms of the number of branches and ATMS they have. One issue about big banks is the fee that they charge compared to other financing institutions. They charge higher fees, therefore, referred to by many people as the “banks for rich.”

Credit unions

While Big Banks are profit-oriented, Credit Unions have a non-profit business model. Unlike banks, which are owned by a single person or entity, Credit Unions are owned by several members who enjoy returns in the form of improved financial terms. Members who have Credit Union accounts are also the owners, and they, therefore, enjoy benefits like the higher interest on deposits and lower loan rates. Another feature of Credit Unions in the United States is that they are regulated by National Credit Union Administration (NCUA). If you want personalized banking experience, lower banking fees and improved interest rates on deposits, Credit unions are financing institution to choose. However, one negative feature of Credit Unions is that they don’t invest much money in technology or other features like the way Big Banks do. We also found that members have limited access to ATMS, so they lack some of the conveniences that customers of Big Banks enjoy.

Online banks

Internet-based banks have many benefits than Big Banks and Credit Unions. They are virtually open 24 hours a day, seven days a week. If you need to speak to an actual banker, online banks have an open number that you can call anytime you want. They don’t incur the cost of running a brick and motor branch networks. This is one of the reasons why they offer the best interest rates on deposits and saving. For example, the average savings account interest rate of Big Banks is roughly 0.03% while that of an internet-based savings account is over 1%.

So which is the best financing institution for you?

As I said earlier, the best banking institution entirely depends on the types of banking features and services you want. You may choose higher interest rates offered by online banks, personal touch of credit unions or the convenience offered by Big Banks.

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