Comparing Bank and Credit Union Checking Accounts

Checking Accounts are the most common form of accounts used for managing personal funds. Although personal checks themselves are used less and less, the accounts can also be accessed via debit cards, online bill paying services, and cash withdrawals at an automatic teller machine (ATM). Checking Accounts are similar in banks and credit unions, but they are not entirely the same. Comparing the two different types of financial entities may be wise before opening a personal account.

A bank is a for-profit financial institution that has outside shareholders. Dividends are paid to those shareholders on a quarterly basis. The profits to pay dividends come from a few sources. One source is feed from checking accounts. Monthly fees, overdraft fees, ATM fees, and fees for online banking, in part, are needed to make the profit. Some overdraft fees can be anywhere from twenty-five dollars to fifty dollars. Fees for ATM withdrawals at a different bank can be as high as five dollars. It does not sound like a lot, but they can add up quickly. Banks also require higher minimum balances to open or maintain a checking account.

A credit union is a non-profit financial cooperative that has no shareholders. It belongs to its members. There are usually no monthly fees for maintaining a checking account, and the minimum balance can be as low as five dollars. Credit unions charge no ATM fees for withdrawals within a network of many different credit unions. It is possible to withdraw money at ATMs all over a State or region and never pay a fee. Credit unions also offer an overdraft privilege that will cover an overdraft for a low fee. That means members are not charged by the payee’s financial institution or the merchant in the event of an overdraft. That can save people a lot of money. Some credit unions, such as Pearl Hawaii Federal Credit Union, offer an overdraft line-of-credit to qualified members. It is considered a personal loan and money is advanced into a checking account in increments of one-hundred dollars to cover any overdrafts. Limits for that protection range from three-hundred dollars to ten thousand dollars. You can also like them on Facebook.

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