Are There Advantages to Keeping Your Money With a Credit Union Instead of a Bank?

The first thing to do is to learn something about each one. Then you can decide which is the better choice.

Banks
Broadly speaking, a bank is a regulated financial institution that provides a wide range of money services to its customers. In the United States there are many different types of banks.

• Savings bank: Most consumers are familiar with savings banks, which can be local, regional, or national. They provide easily accessible services to a wide range of consumers. Most have a focus on retail banking, including personal savings accounts, checking accounts, and loans.

• Co-operative bank: A bank that is owned not by stockholders but by its members, who are also customers of the bank. Co-operative banks are often created by persons who have a common bond. Co-operative banks provide their members with the same banking services as savings and loan banks.

• Mutual bank: Like co-operative banks, mutual banks are owned not by shareholders but by their customers.

• Commercial bank: Refers to a bank or a division of a bank that mostly provides account services for large businesses and corporations. Owned by shareholders.

• Community banks: These are locally operated financial institutions whose employees can make local decisions to better serve their customers.

• Community development banks: These banks specialize in providing financial services and credit to under-served markets or populations.

• Private banks: These banks manage the assets of wealthy individuals. A private bank may have minimum deposit amount of $100,000.

• Offshore banks: Located in nations with low taxation and regulation, most offshore banks are similar to private banks.

Banks make money from fees they charge for their services and from interest they make on loans.

Credit unions
Unlike commercial banks, which are business enterprises designed to earn a profit like any other business, credit unions are non-profit membership organizations, owned by their members, and are governed by volunteer boards. The first credit union was opened in 1844 by a group of weavers in Rochdale, England. It resembled a modern-day buyer’s club. Shares were sold to members with the intention of raising funds to buy goods at wholesale prices. The goods were then sold to members at below retail prices.

Choosing a bank or credit union
Consumers may wonder what the differences are between having a savings or checking account at a CU and a bank. A key benchmark is interest rates: how much you will earn when you save, and how much you will pay when you borrow. According to the Credit Union National Association (CUNA), rates offered by credit unions are sometimes better than the rates offered by banks. This is because CU’s are not trying to operate at a profit.

Are credit union deposits insured?
Most people know that the Federal Deposit Insurance Corp. (FDIC) insures bank deposits up to $250,000 per depositor per bank. Most CU belong to the National Credit Union Share Insurance Fund (NCUSIF), which protects CU deposits up to $250,000. If you join a credit union, make sure it is a member of NCUSIF.

Joining a credit union
Unlike banks, the law places limits on who can join a CU. A credit union’s “field of membership” is defined by its charter. Eligible people could be employees of a company, members of a church, students at a school, or members of an ethnic group. Chances are good that if you are interested in joining a credit union, you’ll be able to find one that will accept you as a member.

Occupational Fraud and Abuse Is Real

Organizations incur costs to produce and sell their products or services; these costs run the gamut: labor, taxes, advertising, occupancy, raw materials, research and development-and, yes fraud and abuse. The latter expense of fraud and abuse, however, is fundamentally different from the former: The true expense of fraud and abuse is hidden, even if it is reflected in the profit and loss figures. The 2006 Report to the Nation on Occupational Fraud and Abuse estimates that U.S organizations lose 5% of their annual revenues to fraud. Applied to the estimated 2006 US GDP (Gross Domestic Product), this figure would translate to approximately $652 billion in fraud losses. For closely held businesses the median loss suffered by organizations with fewer than 100 employees was $190,000 per scheme.

This is a subject that most business owners and managers would like to believe is not an expense to their business. Unfortunately it is a real possibility unless one is diligent, aware of the possibilities and a guardian against the environment that fosters behaviors far less than desired.

You may be asking yourself, “Why do I want to know about fraud and abuse in the work place.” The answer is that good people need to be vigilant and vigilance requires knowledge. My hope is that these articles will be informative. Myself and a few of my partners are studying and working to becoming CFEs (Certified Fraud Examiners) to support our clients through good education and sound business controls. I hope you will not experience any occupational fraud or abuse in your business or professional careers. Let’s get started.

What is occupational fraud and abuse?

Joseph T Wells, CFE CPA, defines “occupational fraud and abuse as “the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.” This involves a wide variety of conduct by any person in an organization ranging from sophisticated investment swindles to petty theft. Common violations include asset misappropriation, fraudulent statements, corruption, pilferage, false overtime, using company property for personal benefits and payroll and sick time abuses. The first Report to the Nation on Occupational Fraud and Abuse, set forth in 1996, states, “The key is that activity (1) is clandestine, (2) violates the employee’s fiduciary duties to the organization, (3) is committed for the purpose of direct or indirect financial benefit to the employee, and (4) costs the employing organization assets, revenues, or reserves.”

Edward H Sutherland, a criminologist at Indian University (1883-1950), actually coined the phase “white collar crime” referring to the sharply pressed shirt collars found in the corporate world with their standard blue, red or black ties.

A brief example of “skimming.” A cashier at a fast food restaurant receives an order for a hamburger, fries and a drink totaling $4.00. The server provides the food and takes the cash. But wait, the cashier didn’t ring up the sale. Where did the money go? Into her pocket. What are lacking here are controls-one takes an order through the register requiring funds to close the order.