Credit Union or Bank?

[LaylaMonroe]

I already know the general consensus is that CUs are better (and with good reason).

However, I'm charged with finding a new banking institution to house our church reserve fund. I've been fighting to have it moved out of our regular bank because it's too accessible. I thought it would be best to put the money in an online bank (like ING or Ally) or in a Credit Union. Finally, I got the go-ahead to move the fund.  I'm most familiar with a particular credit union, which is Christian-owned and managed, and specializes in church and ministry banking.

Here's the thing. The online bank I'm most comfortable with has no minimum and no fees, and offers a .95% APY. The credit union has a small minimum starting deposit (which is no problem), a small fee for going below a minimum balance (again, not really a problem) and a .25% APY. The other thing is that when given a choice, I always support Christian-owned businesses when making purchases or obtaining services for the church - assuming all things are equal or comparable. So I'm kinda leaning toward the CU. But since this is for the church, I want to really think this through and make a good decision. Any thoughts?

[running4dalord]

This truly is a comfort level issue. Even tho I like credit unions some times its not the best choice. I said this also with banks.... There is a bank for everyone but every bank doesn't fit everybody needs and wants...

[running4dalord]

oh, if the idea is to make the funds work for the church then you go with the highest rates you can get, if it is just to house the funds until needed then go with who ever you are comfortable with. I would also check to see if the 0.95% is a promo?

[vtguy84]

The short answer:  Credit Unions are a bigger benefit for the consumer/individual but banks offer better benefits for businesses. 

If you are doing this for your church, the bank is the better way to go.

[csedwards2]

Interest rates really do suck these days.

Annually on $100,000 your account with said bank would pull in $950. So in my opinion, the thought of the interest rates is null, because they're both bad

[phbrown]

*please take everything I'm about to say with a grain of salt*

if you go with the online bank is it easy to make deposits?

I know for me I use a traditional brick and motar bank to make deposits and withdrawals to my online bank. I never did figure out how to withdraw money from my online bank without using a traditional bank ...

[baggettcindy]

I don't know much about either, but how about praying and asking God what He wants you to do.  At least get His opinion....LOL.

[LaylaMonroe]

Interest rates really do suck these days.

Annually on $100,000 your account with said bank would pull in $950. So in my opinion, the thought of the interest rates is null, because they're both bad

That's exactly what I was thinking... the rates really don't even matter.

The short answer:  Credit Unions are a bigger benefit for the consumer/individual but banks offer better benefits for businesses. 

If you are doing this for your church, the bank is the better way to go.

Ahhhh, I hadn't thought of that. Good to know. Thanks. 

*please take everything I'm about to say with a grain of salt*

if you go with the online bank is it easy to make deposits?

I know for me I use a traditional brick and motar bank to make deposits and withdrawals to my online bank. I never did figure out how to withdraw money from my online bank without using a traditional bank ...

You link your online bank to your regular checking account and that's how most people make deposits and withdrawals. However, you CAN make deposits in the mail or via wire transfer - and most credit unions (as well as some online banks) partner with other banks so that you can make deposits at other banking institutions which will post to your own bank account.

[phbrown]

You link your online bank to your regular checking account and that's how most people make deposits and withdrawals. However, you CAN make deposits in the mail or via wire transfer - and most credit unions (as well as some online banks) partner with other banks so that you can make deposits at other banking institutions which will post to your own bank account.

So more than likely you will choose both if you want the online bank. (unless you wanted to do wire transfers and mail the tithes every week, and do withdrawals by mail also)

But if you choose the CU then you will only have to maintain one account.

Is that situation you are facing?

[phbrown]

So more than likely you will choose both if you want the online bank. (unless you wanted to do wire transfers and mail the tithes every week, and do withdrawals by mail also)

But if you choose the CU then you will only have to maintain one account.

Is that situation you are facing?

Go with the CU, either way you are going to open an account with the CU. If the church achieve a certain amount in savings at the CU then extra money can be put away at the online bank at a later point in time.

[LaylaMonroe]

So more than likely you will choose both if you want the online bank. (unless you wanted to do wire transfers and mail the tithes every week, and do withdrawals by mail also)

But if you choose the CU then you will only have to maintain one account.

Is that situation you are facing?

No, this account is for the reserve fund, so the only transactions will be the regular deposits (either weekly or monthly) and occasional and infrequent withdrawals for major emergencies. The deposits will be made via electronic transfer from our regular account (which is with a brick/mortar bank). Got me?

To be clear, we have existing accounts with a brick/mortar bank. I am looking to close one of those accounts and move that money into an online bank (or credit union) for our reserve fund. So we'll still have accounts with a brick/mortar bank, and one with an online bank.

[phbrown]

No, this account is for the reserve fund, so the only transactions will be the regular deposits (either weekly or monthly) and occasional and infrequent withdrawals for major emergencies. The deposits will be made via electronic transfer from our regular account (which is with a brick/mortar bank). Got me?

To be clear, we have existing accounts with a brick/mortar bank. I am looking to close one of those accounts and move that money into an online bank (or credit union) for our reserve fund. So we'll still have accounts with a brick/mortar bank, and one with an online bank.

Ahh Okay

[chevonee]

Larue I love your pic you are GORGEOUS!!! Oh yeah and I always wondered what was the difference between a credit union and a bank which is why I like this thread. 

[running4dalord]

Larue, Everyone is going to give you there opinion but it basically falls back to your comfort zone. Because you are needing the funds to stay liquid a moneymarket and Savings accounts are going to be it. The rate(apr) will vary depending on the bank you use. Now depending on the how much liquid cash you need open for emergencies you could lock up some of it in investments (can give you better rates and depending on what is choosen you could in emergencies put 15% out per year), or cd's (cd's are not giving a lot in rates)

[lordluvr]

If we're talking reserve funds, then two factors need to be examined that have an inverse relationship one with the other: access and rates.  Let's say that your church has enough reserve funds to cover a year's worth of expenses, but you only really need immediate access to 3 months worth.  With the 3 months of reserves, it really doesn't matter whether you choose a bank or credit union because you'll want quick, easy access to those funds.  So, you'll put the funds into a savings account or a money market account at best.  For the remaining funds, you may consider something like CD's, which offer a higher rate, but often put (limited) restrictions on access- meaning that there may be an interest penalty or surrender charge or something like that.

If your church has sufficient reserves to do so, consider a tiered and layerd technique.  The first tier of your reserves should be money you can get the easiest access to, to handle emergencies.  The second tier has similar access, but higher rates (Money market account, certificates with no penalties, etc.)  With the third tier, you can consider a layered certificate approach.  In other words, purchase certificates that have different maturities- 3 month, 6-month, 1-year, etc.  With this layering strategy, you can gain access to higher rates of return without sacrificing access to the bulk of your funds.  An example is to have a CD mature every 3 months, so let's say you purchase:

1- 3 month CD at 1.5% (hypothetical)
1- 6 month CD at 1.75%
1- 9 month CD at 2.1%
1- 1 yr CD at 2.7%

When the 3 month CD matures, you roll that into a 1 yr CD. Why?  Because you have another one coming due in 3 months at a lower rate.  With each subsequent maturity, you purchase a 1 yr CD.  Eventually, you'll always have money coming due every 3 months, but now at the 1 yr rate, as opposed to a 3 month rate.  Even if you had to withdraw all of the funds for a huge emergency, the penalties are normally very low, and normally don't impact the principle at all. (Usually, there's an interest penalty) So, you lose nothing (except for the opportunity cost).

Sorry for the long explaination.  To me, it doesn't really matter what type of institution you use.  All of the funds are going to be FDIC insured up to certain limits anyway.  With all of the mergers and acquisitions that are going on, who you bank with today may not be who you bank with tomorrow anyway.

[chevonee]

If we're talking reserve funds, then two factors need to be examined that have an inverse relationship one with the other: access and rates.  Let's say that your church has enough reserve funds to cover a year's worth of expenses, but you only really need immediate access to 3 months worth.  With the 3 months of reserves, it really doesn't matter whether you choose a bank or credit union because you'll want quick, easy access to those funds.  So, you'll put the funds into a savings account or a money market account at best.  For the remaining funds, you may consider something like CD's, which offer a higher rate, but often put (limited) restrictions on access- meaning that there may be an interest penalty or surrender charge or something like that.

If your church has sufficient reserves to do so, consider a tiered and layerd technique.  The first tier of your reserves should be money you can get the easiest access to, to handle emergencies.  The second tier has similar access, but higher rates (Money market account, certificates with no penalties, etc.)  With the third tier, you can consider a layered certificate approach.  In other words, purchase certificates that have different maturities- 3 month, 6-month, 1-year, etc.  With this layering strategy, you can gain access to higher rates of return without sacrificing access to the bulk of your funds.  An example is to have a CD mature every 3 months, so let's say you purchase:

1- 3 month CD at 1.5% (hypothetical)
1- 6 month CD at 1.75%
1- 9 month CD at 2.1%
1- 1 yr CD at 2.7%

When the 3 month CD matures, you roll that into a 1 yr CD. Why?  Because you have another one coming due in 3 months at a lower rate.  With each subsequent maturity, you purchase a 1 yr CD.  Eventually, you'll always have money coming due every 3 months, but now at the 1 yr rate, as opposed to a 3 month rate.  Even if you had to withdraw all of the funds for a huge emergency, the penalties are normally very low, and normally don't impact the principle at all. (Usually, there's an interest penalty) So, you lose nothing (except for the opportunity cost).

Sorry for the long explaination.  To me, it doesn't really matter what type of institution you use.  All of the funds are going to be FDIC insured up to certain limits anyway.  With all of the mergers and acquisitions that are going on, who you bank with today may not be who you bank with tomorrow anyway.

Ladies and gentlemen LL has spoken!! Let's raise a love offering for this man... *throws $100 on the table*

[LaylaMonroe]

Ummm. I'm still reading, but should I point out that my church is 2 years old? We definitely don't have a year's worth of expenses in reserve. I mean, I know that was hypothetical, but I'm having a hard time processing the rest if the basis of the scenario doesn't apply.

*lemme finish reading*

[phbrown]

If we're talking reserve funds, then two factors need to be examined that have an inverse relationship one with the other: access and rates.  Let's say that your church has enough reserve funds to cover a year's worth of expenses, but you only really need immediate access to 3 months worth.  With the 3 months of reserves, it really doesn't matter whether you choose a bank or credit union because you'll want quick, easy access to those funds.  So, you'll put the funds into a savings account or a money market account at best.  For the remaining funds, you may consider something like CD's, which offer a higher rate, but often put (limited) restrictions on access- meaning that there may be an interest penalty or surrender charge or something like that.

If your church has sufficient reserves to do so, consider a tiered and layerd technique.  The first tier of your reserves should be money you can get the easiest access to, to handle emergencies.  The second tier has similar access, but higher rates (Money market account, certificates with no penalties, etc.)  With the third tier, you can consider a layered certificate approach.  In other words, purchase certificates that have different maturities- 3 month, 6-month, 1-year, etc.  With this layering strategy, you can gain access to higher rates of return without sacrificing access to the bulk of your funds.  An example is to have a CD mature every 3 months, so let's say you purchase:

1- 3 month CD at 1.5% (hypothetical)
1- 6 month CD at 1.75%
1- 9 month CD at 2.1%
1- 1 yr CD at 2.7%

When the 3 month CD matures, you roll that into a 1 yr CD. Why?  Because you have another one coming due in 3 months at a lower rate.  With each subsequent maturity, you purchase a 1 yr CD.  Eventually, you'll always have money coming due every 3 months, but now at the 1 yr rate, as opposed to a 3 month rate.  Even if you had to withdraw all of the funds for a huge emergency, the penalties are normally very low, and normally don't impact the principle at all. (Usually, there's an interest penalty) So, you lose nothing (except for the opportunity cost).

Sorry for the long explaination.  To me, it doesn't really matter what type of institution you use.  All of the funds are going to be FDIC insured up to certain limits anyway.  With all of the mergers and acquisitions that are going on, who you bank with today may not be who you bank with tomorrow anyway.

OOOHHH!!! AHH!!!! I like this! might do it for myself one day....

[LaylaMonroe]

Larue I love your pic you are GORGEOUS!!! Oh yeah and I always wondered what was the difference between a credit union and a bank which is why I like this thread. 

Oh, and thank you so much, Chevonne. That means a lot to me.  Seriously.

If we're talking reserve funds, then two factors need to be examined that have an inverse relationship one with the other: access and rates.  Let's say that your church has enough reserve funds to cover a year's worth of expenses, but you only really need immediate access to 3 months worth.  With the 3 months of reserves, it really doesn't matter whether you choose a bank or credit union because you'll want quick, easy access to those funds.  So, you'll put the funds into a savings account or a money market account at best.  For the remaining funds, you may consider something like CD's, which offer a higher rate, but often put (limited) restrictions on access- meaning that there may be an interest penalty or surrender charge or something like that.

Question... (I tried thinking of it, but can't come up with anything). Under what emergency circumstances would we need access to our reserves in less than 2 business days (ING, for example, takes 2 days to transfer funds).

If we're talking reserve funds, then two factors need to be examined that have an inverse relationship one with the other: access and rates.  Let's say that your church has enough reserve funds to cover a year's worth of expenses, but you only really need immediate access to 3 months worth.  With the 3 months of reserves, it really doesn't matter whether you choose a bank or credit union because you'll want quick, easy access to those funds.  So, you'll put the funds into a savings account or a money market account at best.  For the remaining funds, you may consider something like CD's, which offer a higher rate, but often put (limited) restrictions on access- meaning that there may be an interest penalty or surrender charge or something like that.

If your church has sufficient reserves to do so, consider a tiered and layerd technique.  The first tier of your reserves should be money you can get the easiest access to, to handle emergencies.  The second tier has similar access, but higher rates (Money market account, certificates with no penalties, etc.)  With the third tier, you can consider a layered certificate approach.  In other words, purchase certificates that have different maturities- 3 month, 6-month, 1-year, etc.  With this layering strategy, you can gain access to higher rates of return without sacrificing access to the bulk of your funds.  An example is to have a CD mature every 3 months, so let's say you purchase:

1- 3 month CD at 1.5% (hypothetical)
1- 6 month CD at 1.75%
1- 9 month CD at 2.1%
1- 1 yr CD at 2.7%

When the 3 month CD matures, you roll that into a 1 yr CD. Why?  Because you have another one coming due in 3 months at a lower rate.  With each subsequent maturity, you purchase a 1 yr CD.  Eventually, you'll always have money coming due every 3 months, but now at the 1 yr rate, as opposed to a 3 month rate.  Even if you had to withdraw all of the funds for a huge emergency, the penalties are normally very low, and normally don't impact the principle at all. (Usually, there's an interest penalty) So, you lose nothing (except for the opportunity cost).

Sorry for the long explaination.  To me, it doesn't really matter what type of institution you use.  All of the funds are going to be FDIC insured up to certain limits anyway.  With all of the mergers and acquisitions that are going on, who you bank with today may not be who you bank with tomorrow anyway.

You mean you took my brain through all that for nothing??? 

[lordluvr]

Oh, and thank you so much, Chevonne. That means a lot to me.  Seriously.

Question... (I tried thinking of it, but can't come up with anything). Under what emergency circumstances would we need access to our reserves in less than 2 business days (ING, for example, takes 2 days to transfer funds).

Maybe something like the church needs a major repair done quickly.  I remember one time, our oil heating unit went out on a Saturday.  Pastor called a repair person,  and he replaced whatever he needed to replace (at quite a cost) and we had heat the next morning

You mean you took my brain through all that for nothing??? 

Well, I did say essentially the same thing in the first paragraph, so YOU took YOURSELF through all of that.