Banks vs. credit unions: What’s the difference?

By Sabrina Karl

When shopping around for a top-rate savings account or CD, you’ll likely encounter several credit union options. If you’ve never banked with a credit union before, you might be wondering what the difference is between these institutions and traditional banks.

In short, banks are for-profit institutions that must satisfy their shareholders, while credit unions are not-for-profit with a focus on their member customers. And while almost anyone can open an account with a bank, only customers meeting certain geographic, employer, or other affiliation criteria can join most credit unions.

As a result of their profit status, banks tend to have higher fees and lower interest rates on savings. They may also charge more on loan and credit products. But their strong profit-making ability means they generally offer more products, branches, and ATMs, as well as better online and mobile options.

At a credit union, you may find better savings rates, lower fees, or lower-interest loans, as well as possibly stronger customer service. However, many credit unions offer less branch and ATM accessibility, and many have less customer-friendly mobile sites and apps.

You’ll also need to become a credit union member to be a customer. Each credit union defines a “field of membership” to indicate its affiliation or residency requirements. However, some credit unions accept members nationwide through a very broad member definition.

As for safety, the institutions are equivalent. Whereas your deposits at a bank are federally insured up to $250,000 by the FDIC, credit unions carry the same level of insurance from the NCUA.

For the highest convenience, broadest accessibility, and latest technology, banks will suit some consumers better, but at the cost of potentially higher fees and lower earnings. But for those wanting a top deposit rate or enhanced customer service, a credit union may be the winning bet.

Beware: Employment scams can target your accounts

By Sabrina Karl

When you’re looking for work, the goal is to increase your available income. But for those falling prey to an employment scam, the result is usually a loss instead.

Scammers attract job hunters by promising reasonable or even minimal hours and too-good-to-be-true hourly pay. They also often offer the option to work from home. While you may see flyers for jobs like this stapled to telephone poles, savvy scammers also list these “opportunities” in the same places you’d find legitimate jobs, whether in newspapers, online, or even advertised on TV and radio.

What employment scammers are targeting is an advance payment from you, or access to your bank or credit card accounts, or both. Whenever you’re asked to pay upfront for the opportunity of a job, whether it’s billed as being for certification, software, training materials, or expenses for placing you with the company, watch out. Legitimate jobs almost never carry a buy-in price tag.

Other red flags are unprofessionally written emails with no contact information provided, job requirements and a job description that are very vague, an interview that will happen via instant messenger, and being given the job right away. You may also hear the false promise of being connected with “previously undisclosed” government jobs (all federal jobs are publicly listed).

Some scammers hope simply to charge you an upfront fee that goes into their pocket while you wait for a non-existent job. But more nefarious fraudsters will insist you provide them with a bank or a credit card account number, and then drain additional funds from you. Even worse, they can potentially use your confidential information to commit identity fraud.

As with all possible scams, the advice remains the same: don’t give your bank account and credit card numbers to anyone you can’t verify as legitimate.

How to protect your bank account from loan scammers

By Sabrina Karl

Fraudsters have honed numerous ways to separate you from your money, from outright theft of your personal information to sneaky ways of getting you to divulge it voluntarily. Since one of their deceptive tricks is posing as a loan provider, look for these signs of a legitimate lender if you’re looking to borrow money.

The Federal Trade Commission enforces numerous regulations on lending operations, including requiring all lenders to register in states where they do business. So one of the first things you can verify is whether the lender is registered in your own state.

The FTC also prohibits soliciting loans by telephone. So a marketing call for loan products is a strong tip-off that you’re dealing with a loan scammer. Also beware of offers mailed to you or pitched at your front door.

Legitimate lenders are keenly interested in your credit history when determining whether to approve your loan. So watch out for anyone touting guaranteed approval. Also beware if the lender never discloses that they’ll be pulling your credit report.

Another red flag of loan scammers is requiring you to pay application fees by providing them a prepaid debit card, a gift card, or a wire transfer. Although legitimate lenders are likely to charge fees, they typically add them to your loan balance rather than require upfront payment.

Lastly, any pressure to act very quickly before the offer expires is reason to pause. Legitimate loans may indeed have limited windows, but they will be sufficiently long to allow you to weigh options and make a careful choice.

A primary goal of loan scammers is extracting your bank account and social security numbers. So if you notice any of the warning signs above, be sure to keep your information private and move onto a lender you can verify.

Can I name beneficiaries for a CD account?

By Sabrina Karl

Planning for how your estate will be handled upon your death may seem a daunting task, with many things to consider. Fortunately, however, the process for designating heirs for any certificates of deposit you hold can be very quick and simple.

For the vast majority of bank and credit union CDs, you can complete a form that provides “payable-on-death”, or POD, instructions. Here you can designate one or more beneficiaries who will inherit your CD account upon your death. They won’t have any access to the account while you’re alive, and need not even know they’ve been named a beneficiary.

The significant benefit of specifying a POD beneficiary is that it allows this account to be transferred upon your death outside of any probate process. So rather than be handled by the courts, POD accounts can transfer simply by the beneficiary presenting identification and a death certificate to the financial institution.

Completing this form is generally very easy. If your bank has a solid online platform, you may find the printable form on its website, or even be able to complete the POD instructions electronically online. At a minimum, any bank or credit union will be able to mail you the form.

One potential sticking point in quickly completing a POD form is that it may ask for the beneficiary’s social security number. Financial institutions vary on this, so you’ll need to see what yours requests. Also, even if the form requests it, you can call the institution to inquire whether it is mandatory to provide.

Note that if your CD is held in a joint account — for instance with your spouse — naming them as a beneficiary is unnecessary. Upon death of one joint account holder, the other named individual automatically becomes the sole owner.

How to protect your accounts from charity scams

By Sabrina Karl

Giving to help others is a noble gesture. But unfortunately, there are scammers out there striving to turn fake charitable asks into collections of bank account numbers and other personal information.

Charities are important to our society and helping fund their missions is not something to shy away from. But it’s smart to ensure the donation you’re considering will go to a legitimate organization rather than a fraudster looking to siphon money out of your bank account.

Fraudulent charity requests often purport to provide disaster relief or support veterans, police officers, or fire fighters. But when any kind of solicitation comes directly to you, especially by telephone, be alert and do your homework.

The number one rule is to never provide your social security number, your date of birth, or your bank account number to anyone contacting you for a donation. Also pay close attention to the charity’s name, as some criminals will closely mimic the name of a well-known charity to trick you into thinking they’re calling from an organization you’re familiar with.

The scammer’s goal is obviously to collect a donation that goes right into their pocket. But even worse is the potential for them to keep cheating you if they’ve successfully collected your banking information. Once a fraudster has your account number, the only way to fully protect yourself from future unauthorized withdrawals is to close the account.

If the cause being promoted interests you, do your own research to identify legitimate charities doing work you want to support. Then donate by credit card through the official ways they provide on their website.

In any case, whether you give by debit, credit, or check, monitor your statements carefully to ensure you’ve only been charged the amount you approved, and that unauthorized recurring donations aren’t later going through.