When it comes time to put your money in the bank, does it make more sense to stick it in a savings and loan institution or a credit union? What is the better trade-off here? Is there a dime's worth of difference to be found when making the proper determination for your financial needs?
What is the difference when comparing a savings and loan vs. a credit union? Is there enough of a difference between the two to reveal a better alternative? Or are both essentially the same entity with the same services that is operating under a different name.
A credit union is a cooperative financial institution that is owned and controlled by the people who use its services. The people are members and have a common interest. Federal employees have access to a credit union. Many teachers have access to a credit union. The world's largest credit union is the Navy Federal Credit Union, which serves the U.S. Department of Defense employees, contractors and families of service members, and has more than $35 billion in assets. Because the regulations have been relaxed over the years, nearly everyone can belong to a credit union by completing an application and paying a small fee, which is usually as little as a dollar.
Credit unions operate in a not-for-profit format and exist to give its members a safe place to save money and receive reasonable rates on loans. The credit union is just like a regular bank in terms of services, but instead of being operated as a for-profit business, it is designed to serve the members. Because credit unions are not-for-profit organizations, they can often afford to offer better interest rates than ordinary banks.
A savings and loan association is a financial institution that specializes in accepting savings deposits and making mortgage and other assorted loans. Many times the depositors and borrowers are members and have voting rights. Members often have the ability to direct the financial goals of the organization. The overriding goal of the savings and loan association is to encourage savings and investment by common people. It was there to help pay for items like homes and cars.
The savings and loan association is usually locally owned and privately managed. It makes loans for the construction, repair, purchase or refinancing of houses and give primary attention to single-family residences. They are state or federally chartered.
So which is the better alternative, the credit union or the savings and loan? Both are likely to have comparable interest rates and each will likely be more competitive than a traditional banking institution. The better trade-off comes down to your individual need. If you are looking for a smaller loan, like a car loan or a line of credit loan, the credit union will probably fill the need. But if you need a larger loan for a mortgage, it might be best to go to the savings and loan. Both are find institutions and each is federally insured.
If you're looking for a place to park some money for a rainy day, the better trade may come down to location. It may make the most sense to simply go with the institution that is the closest to your home or office.