BANKS AND CREDIT UNIONS
While you attend college, one important part of managing your finances is to choose and belong to the right bank or credit union. Several banks and credit unions only serve a specific area and if your financial institution is not located where you are attending college, you can face many problems.
Also, to get the maximum impact of your dollar, you need to choose a place that gives you the best interest and financial security while having minimum banking fees and expenses.
What is the Difference Between a Bank and a Credit Union?
A bank is a financial institution that is a profit-seeking
company that takes and lends money in order to receive the maximum benefit from
capital (funds).
A credit union is a nonprofit financial institution that is owned collectively by shareholders/members whose shared invested money keeps the company able to offer their services. Often credit unions can offer higher interest on investments such as savings accounts than other institutions.
What to Look for When Choosing an Institution
- Be sure they are insured against bank failure and other financial crises. Before opening an account, make sure the institution is insured by either the FDIC (banks) or the NCUA (credit unions).
- Ensure that the bank or credit union offers substantial protections for your information and account.
- Research several institutions before settling on one in your area. This will insure that you will get a competitive rate on your accounts and quality service.
- Before signing up for any service, talk with a representative at your institution. Ask questions and read the fine print before signing any agreement.
- Be careful when signing up with an institution "just because" you get a free item, discount, or cash. Often there are stipulations for signing up with this kind of deal. This can include a contract for a certain amount of time or amount of money deposited into an account.
- Make sure that you can use the institution over an extended period of time, not just for a year or two because this will help you gain a good length of business which will help you get loans and other services in the future. Also, some institutions will charge a fee if you close an account prematurely.
- Watch for minimum balances required for an account such as a savings account or a money-market account. If you go below the minimum balance, often they will not close the account, but charge you a service fee.
- Ask about the ATM service provided by the institution you bank with. Many times if you use an unauthorized ATM you are charged a service fee, sometimes as high as $5 - $10 per withdrawal.
- Watch for hidden fees and other charges associated with an account.
- The rates of interest for the different accounts you will be putting your money into.
- If you have any questions, be sure to ask a representative at your institution. They are there to help you.
Conversation with a Financial Aid Office employee. (2009).
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