Credit Unions Touted as Safe Alternative Amid Industry Concerns
Monday, April 10, 2023
The recent collapse of two banks has put the U.S. financial sector into focus. Customers in Wisconsin and elsewhere are being reminded that there are reliable options.
Many consumers and financial advisors believe the "big four" national banks are the safest. Still, others are considering the alternative structures of institutions - such as credit unions.
Kimberley Jones - Midwest director of community engagement with 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, and our mission is economic opportunity for all," said Jones. "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."
The March 13 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.
Jones said credit unions have spent recent weeks reassuring customers and noting differences in the way they do business.
One of the few similarities between banks and credit unions is that their deposits are both insured. Brady Quirk-Garvan is a financial advisor for Natural Investments, and said both kinds of 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," said Quirk-Garvan. "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 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," said Quirk-Garvan. "What that means is that they're more likely to take profits from the year and invest it in member services."
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