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May 31, 2014, 04:00:44 AM |
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For a somewhat "traditional" reply...
Banks and CUs primarily spend what used to be interest on free or subsidized services, and CUs tend to be more expensive if you use them "unusually." For example, if I want a bank statement from them, it costs $5/month to have them print it out, they started refusing outgoing international wires last year, and charge me a fair amount for things like checkbooks. Rates in savings and CDs there usually match maybe half "real" USD inflation.
Banks, OTOH, offer practically no interest (and usually charge you after fees) but tend to have more features (like mobile banking, no-fee and instant intra-bank transfers, and permitting outgoing international wires). Often, their services are more heavily-subsidized or free, but definitely not always.
It needs to be compared case-by-case. Some credit unions participate in Shared Branching, which is absolutely awesome, allowing instant no-fee transfers if the other person also has a CU participating in Shared Branching. A good many do, but a good many do not, too. They've started requiring the recipient's last4 SSN, though, which is ridiculous. It may also be worth considering whether or not you believe you'll have a little more "spirit of the law" dealing with regional or even local CUs over corporate banks, which I've found tend to be very "letter of the law" and unwilling to budge on anything. They'll tell you owe them $150 for whatever bogus reason, and fuck you if you disagree. For that reason alone, I'll always stick with my local CU, with staff always happy to act human for me.
No matter what, though, banks and credit unions are where your savings go to die, and nobody should keep large sums of money there unless they're dying and want to "lock in." Their role these days is largely limited to bill paying, bill paying, and bill paying. I don't see any reason to favor bank/CU IOUs over cash for savings, and would suggest Americans favor "real" investments considering CDs usually have negative adjusted return expectations these days.
Fwiw ETA: it's been a while since I've read Mish, but IIRC, service overhead expenses tend to cost something like 1.75-3% of deposits, annually, which would've otherwise been interest you'd be accruing for dirt-basic service. Banks tend to be on the higher side of that range, while CUs are in the lower side. Interest rates have been sliding down fast, but banks and CUs tend to offer many more services these days... mobile banking, instant/free intra-bank or inter-CU transfers, online account management, free debit cards, etc
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