The Country Club of Financial Institutions?

Drew Thomas  0:13  
Here we are back again in the seat.

Jeff Matevish  0:15  
In 2025.

Drew Thomas  0:17  
2025. How was your holiday?

Jeff Matevish  0:20  
It was good. It was good to see family. How about you?

Drew Thomas  0:24  
Always good to see family. Less happy to see the certain family members that like to try to start arguments around the dinner table.

Jeff Matevish  0:30  
Well, you'll have that, yeah.

Drew Thomas  0:31  
Yeah. There always seems to be one that'll make an argument out of the weather, if they have to, you know, try to avoid the hot, you know, the, the minefield conversation.

Jeff Matevish  0:40  
Sure, sure, sure.

Drew Thomas  0:41  
But no, it was good, you know, so and now we're breathing the fresh, clean air of January.

Jeff Matevish  0:46  
Yep, driving down the dirty, wet, snowy roads.

Drew Thomas  0:52  
I'm trying to think more of the postcard side see on the calendar.

Jeff Matevish  0:56  
Fair enough.

Drew Thomas  0:56  
Supposed to be a, supposed to be a clean slate in January, everything's fresh and new.

Jeff Matevish  1:01  
Sure, sure.

Drew Thomas  1:02  
I'm trying, I'm trying to be optimistic here. You're dragging me down, Jeff, so what are we talking about today?

Jeff Matevish  1:07  
So, we're talking about credit unions.

Drew Thomas  1:10  
Oh, that's cool.

Jeff Matevish  1:11  
The last 2 Cents you had mentioned that you were a member of a local credit union, and we thought that, hey, maybe talking about the differences between a credit union and a bank might make a good 2 Cents, so here we are.

Drew Thomas  1:23  
And we'll let you be the judge as to whether this is a good 2 Cents or not. But I think it is. I think this is a good idea. I think it's a good topic. I think there's a lot of questions about this.

Jeff Matevish  1:30  
I knew virtually nothing about credit unions before recording this, so.

Drew Thomas  1:34  
Okay, so what, so what did you assume what credit union was if you weren't really sure what they, what they were?

Jeff Matevish  1:39  
I assumed it was like a financial country club, like you paid your dues. You had special rates. It was, like a members only type thing for a select group of people, and...

Drew Thomas  1:44  
They were all called Muffy and Buffy, yeah. I mean, yeah, Donald and so forth, yeah. Well, I mean, so I don't think you're entirely wrong. I mean, there are members right. You can't or there is, there are some limitations to who can join credit unions, and we'll talk a little bit about what those are. But a credit union, you know, I mean really the, I'd say probably the biggest difference between a bank and a credit union is that credit unions are not-for-profit, and banks are for-profit entities. And that doesn't necessarily make one better than the other. I think a lot of people, when they hear for-profit, they automatically think of, you know, Potter from It's A Wonderful Life just sitting in his chair and scheming and trying to destroy the town like that's not what a bank does. No. We're just out of the holidays, so that's fresh in my head, but, but really, I mean, just because you're for-profit doesn't mean you're not good for the community, or one, you know, a good a good organization, but so, yeah, so that organizational structure is probably the biggest difference between the two.

Jeff Matevish  2:49  
And then another difference was that credit union has members, but a bank has customers.

Drew Thomas  2:55  
Correct. Yeah, yeah. So, and I guess that's a good segue into, why are they called members, whereas banks have customers, right? So, there are membership requirements to be a member of a credit union, right? They are, they are called members. So, traditionally, credit unions, they're not open to everyone. In some cases, you need to live in a particular area. Sometimes your qualification's based on your occupation or belonging to a specific organization or association. So, to your point, when you said that I'm a member of a credit union, that I mentioned that on a previous, I do have accounts at a local credit union called USSCO, okay, which is U-S-S-C-O. We all just call it USSCO, but it's U-S-S -C-O.

Jeff Matevish  3:37  
That's our, like, big one around here.

Drew Thomas  3:39  
Yeah, that's probably the biggest one around here, and they are the United States Steel Workers Company. So, the credit union was established back in the mid-50s for the people that worked at the United States Steel plant that was in town. So, it was open to them and their family members, their immediate family members. And so, my grandfather worked for U.S. Steel. So, therefore my dad was a member, which meant that I got to be...

Jeff Matevish  4:02  
Oh, that was, that was your in.

Drew Thomas  4:03  
Okay, that was my in. Okay, right. So, but to your point, you, you can't always just decide, well, I'm going to become a member of USSCO. Like, if you don't have that family connection, or you don't have that steel worker connection, then you really can't get in.

Jeff Matevish  4:18  
Now, some of these credit unions are more relaxed on their membership requirements now, but...

Drew Thomas  4:23  
Some of them are getting relaxed because I think they, they're looking for, they want to make sure they can get customers.

Jeff Matevish  4:27  
Sure, yeah.

Drew Thomas  4:28  
So, they are relaxing some of that stuff, but I think that it helps to retain a sense of community, a sort of shared vision of where you want to go, because you are a member of the credit union, you're part owner, theoretically, of the credit union. Yeah, you get a vote on what happens, how the organization is run, yeah. So, you want to have a common sort of goal, I guess, like, if you're, if you're a bunch of steel worker families, chances are you have similar wants and needs, as opposed to, say, a group of teacher families, right? Because teachers have their own credit union options, right? So, so, yeah.

Jeff Matevish  5:05  
So, it's like a family, the members kind of look after each other, you know?

Drew Thomas  5:09  
Sure. No, I mean, I think that there are times whenever, because it is a little more close knit, maybe if you're needing a little bit of a well, we'll, we'll kind of, like, let you slide on this, that, or the other, on in terms of, like, getting qualified for a loan or something like that. Sometimes they can be a little more lenient. They still have to be intelligent, yeah, they can't give you a loan if they know you're not worthy. But when I was a kid, when I was a, you know, getting my first car, I got my first car loan through the credit union, and my grandfather pledged his shares, oh, to get me, you know, so that I could get the loan. So, yeah. So, it was one of the things where, as a, as a 16-year-old kid with only a part time job, chances are I would have had a more difficult time getting that car loan had it not been for my grandfather helping me out through the credit union, cool. So, so there are advantages for sure, you know. But you know, on the other side, when you're dealing with banks, I mean, as long as you're credit worthy, you can open an account at any bank.

Jeff Matevish  6:01  
Yeah, if you're not a bad customer at a different bank, or you're doing something illegal or, you know.

Drew Thomas  6:06  
Yeah, true. I mean, right. I mean, if you don't have the proper identification, or you're committing fraud or something like that, banks can, can deny you an account.

Jeff Matevish  6:16  
So, can a credit union.

Drew Thomas  6:18  
But so can a credit union, right. So, so you're, I think that's something to think about, is that there are limitations to which credit unions you may or may not be able to join up with, yeah, you know, whereas there are less of those kinds of limitations to what bank you decide you want to bank with.

Jeff Matevish  6:33  
Sure, right. So, you had mentioned that your grandfather offered up his shares, yeah. So, I did find in my own Google search that credit unions and banks have a little bit different lingo on certain accounts, like what, what banks call a savings account, a credit union would call a share account, and what they would call, what we would call a CD, they would call a share certificate. So, just a little tidbit, yeah, since you mentioned share.

Drew Thomas  6:59  
No, no, you're right. I mean, that's, that's a good point. So, there is a terminology difference. Terminology difference, right? But they're basically the same.

Jeff Matevish  7:07  
They act in the same way, yeah.

Drew Thomas  7:08  
Yeah. So, if you are, according, I went and looked this up, though, according to the credit union National Association, which is different than another organization we'll talk about later, similar letters, but 99% of consumers are eligible to join at least one credit union. But you got to keep in mind that a lot of credit unions are designed to serve their local community, so you're probably not going to want to join a credit union that's not in your town.

Jeff Matevish  7:33  
Sometimes you can't, yeah.

Drew Thomas  7:34  
Yeah. Sometimes you can't, yeah. That's true.

Jeff Matevish  7:37  
Though, I did learn also that once you are a member of a credit union, you are a member for life, so if you do move, then that you are still a member.

Drew Thomas  7:43  
Yeah, yeah, which I would assume, I don't know this because I've never closed my accounts, but I don't know what happens if you close your accounts, if you can reopen them, or if, like, you know, but, oh, I just never let my accounts close. That's pretty much why I still have my accounts over there, is because they're a sort of a secondary account for me, and I just try to keep them funded so that I'm still a member.

Jeff Matevish  8:02  
Well, you cannot be a member of a credit union without what we call a savings account, but they call a share account, yeah. So, you couldn't even close that if you wanted to.

Drew Thomas  8:10  
Well, if I didn't want to be a member.

Jeff Matevish  8:12  
If you want, anyone didn't want to be a member anymore, yeah.

Drew Thomas  8:13  
Yeah. So, you said about terminology differences, but let's talk about a little bit about the services that credit unions have, and banks have. So, okay, so both credit unions and banks have checking and savings accounts, loans, credit cards, investment vehicles for their members, that sort of thing. But you may find, I think, that some credit unions, especially smaller credit unions that only service a small area, they're not always going to be cutting edge on their technology, should we say?

Jeff Matevish  8:42  
No. Because they're not-for-profit, so that's not their priority, I guess.

Drew Thomas  8:46  
Yeah. And some of that stuff's expensive. Oh yeah, that infrastructure is expensive.

Jeff Matevish  8:50  
For online banking and apps and everything. Yeah, yeah.

Drew Thomas  8:53  
Yeah. And plus, quite honestly, there's some skill involved in creating those things that I don't want to be disparaging, but if you only have a small team running your credit union, maybe you don't have a person on your team that is dedicated to app development. Yeah, right, because you're not-for-profit, you only have so much money to go around. So, maybe that person isn't as high on your priority list to hire, right? Because you need tellers and you need, you know, right, facilitators and administrators and so, so maybe that type of person isn't the type of person you hire right away if you don't have the money for it, yeah, you know, so things like ATMs too. You know, a lot of banks, if you have a, if you're banking with a national bank like Chase, or Bank of America or something, there's an ATM pretty much in any big city, whenever you wanted to, you know, if you want to surcharge free ATM, a lot of your smaller credit unions are going to be limited to the ones around town, unless you want to pay a surcharge.

Jeff Matevish  9:50  
You know, they're getting better at having those shared ATM access, though.

Drew Thomas  9:53  
Yeah, there are definitely shared sort of networks you can join. I know the credit unions, they have a, they have a network called Co-Op that allows you to share ATM access with other credit unions.

Jeff Matevish  10:05  
Star and all point.

Drew Thomas  10:07  
Yeah. And banks can sometimes, like community banks, like, yes, we can sometimes join those kinds of things too, to give people a leg up on trying to avoid surcharges and so forth, especially if you're traveling. Yeah. So, we kind of talk about credit unions always being we've been talking about credit unions as small, but they're not all small.

Jeff Matevish  10:24  
No, no, there's one really big one though, the Navy Federal Credit Union, yeah, that has assets of over $180 billion.

Drew Thomas  10:33  
Yeah, that's a lot of assets. 180 that's a big company, that's a, I keep wanting to call them a company. They're not a company, but that's a big credit union. $180 million in assets, and they have over 14 million members, wow. But their commonality is, of course, the armed services, yeah, so you know, and you don't have to, contrary to what people will possibly tell you, you don't have to be a member of the Navy to join Navy Federal Credit Union, like you can be in any of the Armed Services branches.

Jeff Matevish  11:00  
Okay. Or your relative, one of your relatives, yeah, yeah.

Drew Thomas  11:03  
Or one of your relatives, right. Even the Coast Guard, even the Coast Guard, Space Force. I'm certainly not disparaging any member that, I appreciate, we appreciate everything the military does. But unfortunately, those two kind of get the, I don't know they, they seem to always get the short end of the stick, yeah, yeah. So, let me ask you this. So, we've talked in the past about the FDIC and so forth. So, does the credit unions have a similar, they do, organization?

Jeff Matevish  11:27  
They have the NCUA, which is the National Credit Union Administration, and it works much the same way as the FDIC does. The Share Insurance Fund insures individual accounts at federally insured credit unions up to $250,000 just like the FDIC does, and a member's interest in all joint accounts combined is insured up to $250,000.

Drew Thomas  11:48  
Okay, so if, if you and your wife both have an account, just like at a bank, right, you and your wife both have an account, it's got $500,000 in it to make it easy.

Jeff Matevish  11:57  
That's insured if that credit union goes under somehow.

Drew Thomas  12:00  
Right. Because you're insured for $250,000 and she's insured for $250,000 so, yeah, so, so just like the FDIC. And just like the FDIC, the NCUA does not ensure money invested in stocks or bonds or mutual funds, anything that has a risk of and that you're basically told, like, look, this could go up or this could go down. We're not going to insure you for it, because you're, you're knowingly taking the risk that this is an investment that could, you know, vacillate. Yeah, right, right. So, there is a link in the description that we'll put there for both the FDIC and the NCUA that shows you what kinds of accounts they cover. So, if you're curious and seeing what kinds of accounts are covered by the FDIC or the, and or the NCUA, we'll put links in the description. You can take those. Take a look at those. Cool. So, one of the other questions that I looked at was, are banks or credit unions more common in the US? And turns out...

Jeff Matevish  12:48  
I would say banks. I see more banks, at least in this area, than credit unions. Yeah, yeah.

Drew Thomas  12:53  
I mean, I would tend to think of the same thing. There are, there are a couple more credit unions in the area, though.

Jeff Matevish  12:59  
Yeah, they're just not, credit unions don't seem to be as advertised as much as banks do.

Drew Thomas  13:04  
Yeah, that's probably true. Well, there's probably a reason. If you, if you can't be a member.

Jeff Matevish  13:08  
It's an elite, you know...

Drew Thomas  13:09  
It's elite. Yes, yes. We only, we only advertise to the high and mighty, yeah. But I mean, in all seriousness, though, why waste money on advertising dollars if not everybody can take advantage?

Jeff Matevish  13:20  
Most, most of its probably word of mouth.

Drew Thomas  13:21  
I would imagine, yeah, but I did look this up as of last year, 2024 can't believe that's last year now, the FDIC listed 4,577 banks in the United States, whereas there were 4,572 federally insured credit unions. Wow. So, it's five difference.

Jeff Matevish  13:42  
That's insane. I wouldn't have thought that at all.

Drew Thomas  13:44  
Yeah, I wouldn't have thought that at all either, to be honest, that's pretty crazy. So, yeah, I mean, they're, they're definitely out there. You know, it's just to your point, I think maybe they just don't get as much publicity.

Jeff Matevish  13:54  
Yeah, definitely.

Drew Thomas  13:55  
So, why else would I want to look at a credit union?

Jeff Matevish  13:57  
Well, I've heard they have better rates sometimes, lower fees, yeah, because they're not-for-profit, yeah, yeah. So, they're not-for-profit, whatever, whatever profit they do make, they kind of give back to, to their members with lower rates and better fees. And yeah.

Drew Thomas  14:11  
Yeah. And to your point, the dividends, like, if they make too much profit.

Jeff Matevish  14:16  
Right, that gets put into their, what we call a savings account, they call a share account.

Drew Thomas  14:20  
Yeah. So, I guess I think you're right. I mean, as a rule of thumb, because they're not-for-profit, they are known for having traditionally higher interest rates on things like deposits or lower fees or better rates on loans. I will say, when I've looked around, they're not always exponentially better. It's hard to do an apples-to-apples comparison, because, again, with this because they're not, right, with a bank, you can, you can rate shop around, and you can say, well, this bank, you know, bank A has 4.25% interest rate on whatever CD, bank B has a 4.50% interest rate on that same term. And you can just decide to go to bank B. But with a credit union, you may not be able to do that kind of rate shopping, because maybe you can't be a member of the one that has the better rate, yeah, so there's that limitation, but I guess if you are a member that, of that credit union, you can get a better rate, then that's great, you know? I guess take advantage of that, right? I mean, so.

Jeff Matevish  14:24  
But it's always important to do research.

Drew Thomas  15:16  
It is, yeah. I mean, rates vary widely, you know, all across the country, quite honestly, and sometimes even in your hometown, based on a variety of factors. So, if you're not familiar or comfortable making those decisions yourself, don't rely on me and Jeff, find a qualified financial professional to help you decide where to put your money, because as much as we are here to help, we are definitely not telling you where to put your money or what to do. We're just giving you the options, yeah, telling, telling you the differences. And I guess the last part of this that we should probably talk about is that when you research this stuff online, you hear a lot about credit unions just being nicer or better for their communities.

Jeff Matevish  15:52  
Yeah, you do hear that a lot. Yeah.

Drew Thomas  15:54  
And I don't know, I guess I'm making an assumption myself, but I would have to assume that they're talking about the difference between your local credit union that services a small town in Illinois, and they're comparing that against one of these mega banks that covers the whole country or even internationally, probably. And it does go to show, or it sort of it does follow that the small credit union in that one town would be more interested in the local food bank, for example, than the mega bank would be interested in that particular food bank in that particular town. So, I mean, I you know...

Jeff Matevish  16:29  
You have to compare community bank to credit union pretty much.

Drew Thomas  16:32  
And I think that's, you, you hit the nail right on the head. I think that you forget about the community banks, right? Community banks like AmeriServ, that truly do work only within our communities and want to help out that local organization; the Girl Scout troop you know from, from your, your local school or the local church or whatever it is you know. So, just because you're a bank and you're for-profit again, doesn't make you an evil entity. No. There, there are a lot of community banks like us that really do want to help our local communities, and so maybe that would be a more fair comparison, is to compare credit unions to community banks, rather than comparing them to a megalithic Ally Bank, you know, online only, or something like that. Yeah, you know. So. So now, do you have a better idea of what a credit union is?

Jeff Matevish  17:19  
I do definitely. Am I going to join one? Who knows.

Drew Thomas  17:23  
I don't know if you qualify.

Jeff Matevish  17:24  
I don't know if I qualify. Yeah, you're right.

Drew Thomas  17:26  
We'll start our own, Podcasters Credit Union.

Jeff Matevish  17:29  
All right, Drew.

Drew Thomas  17:29  
Just loan each other five bucks for lunch.

Jeff Matevish  17:31  
Yeah. All right. Thanks, Drew. Yep.

Drew Thomas  17:43  
This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts with the goal of helping to take some of the mystery out of financial and related topics, as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast and any resources available for download from our website or other resources relating to Bank Chats is not intended and should not be understood or interpreted to be financial advice. The host, guests, and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The host of Bank Chats is not an attorney, accountant, or financial advisor, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation.

Drew Thomas  18:50  
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