The collapse of two banks has put the U.S. financial sector into focus this week. Many consumers and financial advisors believe the “big four” national banks are the safest. Still, others are considering the alternative institutions such as credit unions.
Kimberley Jones, Midwest director of community engagement for the Self-Help Federal Credit Union, said most credit unions are mission-driven and are involved in the community where they are more likely to look at risk differently.
“Self-Help Federal Credit Union is a nonprofit credit union, and our mission is economic opportunity for all,” she said. “And so our goal is really to provide affordable and responsible financial products and services to those who typically can’t get access to them in other, maybe larger banks.”
The March 13th collapse of Silicon Valley Bank is the second-largest bank failure in U.S. history. To get depositors all of their money, the government was forced to step in.
Credit unions have spent recent weeks reassuring customers and noting differences in the way they do business, Jones said.
One of the few similarities between banks and credit unions is that their deposits are both insured. Bank deposits are insured by the Federal Deposit Insurance Corporation, while credit unions have their own insurance fund, run by the National Credit Union Administration.
Brady Quirk-Garvan, financial advisor for Natural Investments LLC. said both institutions’ deposits are covered up to $250,000.
“Your money is insured by the government, and that’s true not just at big banks but, importantly, at credit unions and local banks. So that level of insurance is there whether you choose to go with one of the big megabanks or with your local credit union,” Quirk-Garvan said, and added credit unions often handle depositors’ money very differently than the so-called mega-banks.
“One of the reasons that I personally have chosen to do my banking with a credit union is because their mission, their end investor, if you will, is their member. What that means is that they’re more likely to take profits from the year and invest it in member services,” he said.
Mark Richardson
