Credit Union or Bank?
There is a lot of marketing for your banking. Banks are in overdrive trying to convince you to deposit your money with them. They are offering all types of benefits to new customers. Be careful with the illusion of benefits and always read the fine print. Do I go for the benefits? Do I move my money for a little more interest? Which is better a bank or a credit union?
Let's start with what I think is the first 3 rules of thumb. Select your banking partner on the basis of reputation, convenience, and customer service.
Basis of Reputation
Well, that eliminates the big banks. I would never bank with any banks that are consistently in the headlines for the wrong reasons - Wells Fargo, Bank of America, etc. Why bank in a culture where banks take advantage of their customers?
This is a big one. Make sure you can easily access money and make deposits. With all of the time constraints we are under, going to the bank isn't always convenient. At least make the process convenient. I certainly wouldn't inconvenience myself for a little more of a paltry interest rate on my emergency account.
This is important as well and probably the most important of the three. I would even sacrifice location for this one. It is important to feel like you are taken care of. A bank where they put the customer first. You will find this with the smaller banks.
Banks vs Credit Unions vs. Online Banks
I like the smaller banks better than the big banks. Credit Unions offer an interesting alternative. Since they are more home grown, they tend to offer better customer service. They also tend to offer better rates on savings accounts, credit cards, and other banking services. The credit union model is non-profit and as a result, can afford to offer better deals. Online banks are a good alternative. However, I don't like anonymous banking. Further, if I want to, I like the ability to walk into the lobby of my bank. There is still not a lot that is none about online banks. Having said that, an online bank should be covered by the same FDIC protection as all other institutions.
The bottom line - stick with the litmus test above and change banking partners only when and if they start to falter on either reputation or customer service. Most importantly, don't sacrifice any of the above for a little more interest that is probably temporary anyway.