CU vs Bank

[wmarat]

A lot of people on this forum speak highly and recomend to use CU for banking. I am a customer of BOA, AmTrust Direct and EverBank. I am not exactly unhappy with those banks but at the same time I do not feel wanted by those institutions. So I went on line to learn regarding CU. I compared by APY's and APR's. Banks won. BOA offers higher APY on CD. EverBank and AmTrust Direct offer higher APY on MMA. CU CC's almost  do not offer any perks ( with an exeption of Penfed Platinum Visa, but it is easier to get BOA AMEX than Penfed card) Only Penfed offers competative APR on autoloans, rest the cu's offer approximately the same APR as banks do.

So, why, you guys, are in love with CU.

[Anonymous]

CU seem to give you a more personal touch. IMOP. Banks pretty much see black & white no gray.

[wmarat]

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credit4me wrote:

CU seem to give you a more personal touch. IMOP. Banks pretty much see black & white no gray.

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I am sorry, but I doubt it.

[haulingthescoreup]

I am a member of USAA. I have never applied for an credit product; they have just offered them to me. My most recent example was a pre-approved HELOC for up to $125K, when my EQ was only 651. When I asked them why on earth they would do this, they said that it was because I had been with them for 28 years.

This sort of loyalty is no longer found in commercial banking, after several decades of takeovers.

There is a very different "feel" to CU's. They are more liberal, in that they offer credit to members with lower scores, and at the same time, they are more conservative, in that they don't offer gimmick cards and their APR's are often a bit higher. But with some of the nationally-based CU's, their CL's can be sky-high --I have a $30K limit on one USAA card.

I just have a feeling that with both my local CU (UTFCU) and my nationwide one (USAA), I know where I stand. And with the hysteria afflicting the commercial banks, that puts the CU's out ahead for me.

[wmarat]

I understand what are you talking about, but with all due respect, banking is about money.

UTFCU offers MMA with an APY up to 1.9%, while my MMA's with EverBank and AmTrust direct bear APY of 4.7% and 4.8% respectevly. Almost 3% difference.

USAA offers 4.18% five year APY for jumbo CD. I have 4 month CD with BOA wich bears 5.1% APY.

I am asking to learn financial logic why CU is better than bank.

[haulingthescoreup]

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@wmarat wrote:

I understand what are you talking about, but with all due respect, banking is about money.

UTFCU offers MMA with an APY up to 1.9%, while my MMA's with EverBank and AmTrust direct bear APY of 4.7% and 4.8% respectevly. Almost 3% difference.

USAA offers 4.18% five year APY for jumbo CD. I have 4 month CD with BOA wich bears 5.1% APY.

I am asking to learn financial logic why CU is better than bank.

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Good Lord, I would never go with UTFCU's savings products. They're dreadful. And yes, the CD rates with USAA can be beaten.

In the end, I think a lot comes down to the CC offers and ongoing maintenance. After all, many if not most of the posters on this site are trying to find good CC's to help them build or re-build their credit, as revolving carries so much weight in scoring. And for CC's, CU's do come out ahead --please read the latest Consumer Reports report:

The card issuers that scored exceptionally well in our Ratings--USAA Federal Savings, the Navy Federal Credit Union, and a group of other credit unions--also charged median interest rates between 9 and 11 percent, compared with the 17 percent imposed by the two issuers at the bottom of the Ratings.

USAA Federal Savings, which issues American Express- and MasterCard- branded cards, earned a reader score of 95 out of a possible 100. That's one of the highest scores we have seen in recent years. The Navy Federal Credit Union, which offers MasterCard and Visa, was also very highly rated by our readers, as were the other credit unions.

"Credit unions are run by members, so they have a vested interest in providing credit at very low rates," says George Overstreet, a University of Virginia finance professor who studies creditunion operations. "And they are more focused on keeping their members happy, while banks have to worry more about keeping their investors happy."

Beyond the world of CC's, you then have to consider the question of "How much am I willing to pay for superior service?" With products like CD's, there's not a lot of room for bad customer service to cause problems. You buy it, you wait for it to mature, and then you redeem it or re-invest it. But with loans, investments, checking and savings, you may well need the help of the lender to untangle problems, and then you need to be with a good company.

You said, "Banking is about money," and indeed it is, but there are a lot of lenders out there, and if I can find one who will make my life simpler and put a smile on my face for about the same amount of money, they've got my business. It just doesn't cost that much more to provide quality customer service.

edit: whoops, Consumer Reports, not J.D.Power, which ranked bank-issued cards.

Message Edited by haulingthescoreup on 01-18-2008 06:41 PM

[Anonymous]

Once again hauling, well put!

Very good post.