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Good Question: How Do Banks, Credit Unions Differ?

(WCCO) With all the anxiety about the economy, many of us are wondering if our money is safe.

Not just in the stock market, but in our neighborhood banks.

You've probably heard your savings are insured up to $250,000, but WCCO viewers wanted to know: Are your deposits as safe at a credit union? And how are banks and credit unions different anyway?

Transactions are done inside a credit union just like they are at a bank.

HiWay Federal credit union in St. Paul has been around more than 75 years and has nearly $750 million in assets.

Credit unions are a cooperative association. Most have a volunteer board of directors chosen by the members.

So if you're a member of a credit union, are you a shareholder in the credit union?

"Absolutley'" said Jeff Schwalen, the President of HiWay Federal Credit Union. "I'm a member, so I have one vote, and we about 55,000 members and everybody gets a chance (to vote). They all get mailed a ballot."

Credit unions offer similar services to banks. The big difference is as a cooperative, credit unions don't pay federal income tax. That usually means better rates for members.

"We're able to allow for higher interest rates that we pay on typically certificates of deposits, money market rates, savings and checking accounts," said Schwalen.

A deposit at most credit unions are as safe and as guaranteed as at a bank. In fact, the bailout bill congress passed last week treats banks and credit unions equally.

The government now insures a single account up to $250,000. The old amount was $100,000.

At a bank, you'll notice the FDIC sign. At credit union, its the NCUA, or national credit union administration. Both federal agencies insure your deposits.

Credit unions started within the walls of factories or businesses, but most have nothing to do with labor unions.

These days they're more aggressive about marketing their rates and products to everybody.

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