Should I use a bank or a credit union for my savings account?
"Your instructor's numbers do not seem to have any basis in current reality. At this page you can see a comparison of interest rates offered by banks and credit unions.  In the most recent table for June 2014, banks paid an average interest rate of 0.12 percent on savings accounts, while credit unions paid an average of 0.13 percent.   If you look back further, you will see that interest rates paid by banks and credit unions are generally comparable.  Credit union rates tend to be a little bit higher, but certainly not 7 times higher. The last time any financial institution paid as much as 15% on a savings account would probably be the early 1980s.  You can see here a historical chart of the ""prime rate"" for lending.  Savings account rates (at either banks or credit unions) would typically be lower. (This is based on the US, in accordance with your tag.  Interest rates in other places, especially developing countries with less stable currencies, can be dramatically different.)" "In practical terms, these days, a credit union IS a small ""savings and loan"" bank -- the kind of bank that used to exist before bankers started making money on everything but writing loans. They aren't always going to offer higher interest and/or cheaper loans than the bank-banks, but they're almost always going to be more pleasant to deal with since they consider the depositors and borrowers their stockholders, not just customers. There are minor legal differences (different insurance fund, for example), and you aren't necessarily eligible to open an account at a randomly-chosen credit union (depending on how they've defined the community they're serving), but they will rarely affect you as an account holder. The main downside of credit unions is that, like other small local banks, they will only have a few branches, usually within a limited geographic area. However, I've been using a credit union 200 miles away (and across two state lines on that route, one if I take a large detour) for decades now, and I've found that between bank-by-mail, bank-by-internet, ATM machines, and the ""branch exchange"" program (which lets you use branches of participating credit unions as if they were branches of your own) I really haven't felt a need to get to the branch.  I did find that, due to network limitations of $50K/CU/day, drawing $200,000 worth of bank checks on a single day (when I purchased the house) required running around to four separate branch-exchange credit unions. But that's a weird situation where I was having trouble beating the actual numbers out of the real estate agents until a few days before the sale. And they may have relaxed those limitations since... though if I had to do it again, I'd consider taking a scenic drive to hit an actual branch of my own credit union. If you have the opportunity to join a credit union, I recommend doing so. Even if you don't wind up using it for your ""main"" accounts, they're likely to be people you want to talk to when you're shopping for a loan."
"•Have you had any problems with bills not being paid? NO •If you had issues, were they addressed satisfactorily? Answer: A big issue that blindsided me:  With my bank, the funds come out of my account right away, but the actual payment is done through a third-party service. On my bank's online site it appears that the payment has been made, but that does not necessarily mean that the intended recipient has cashed it.  Looking online at my credit union's site is useless, because all I can tell is that the payment has been sent. The only way to verify payment is to contact the intended recipient.  Or I may telephone the online bill pay representative at my bank/credit union, who has access to the third party service. If I do nothing, after 90 days, the check is void, at which time the third party service notifies the bank/credit union and the funds will eventually end up back in my account.  I learned this today, after a third-party paper check to a health care provider was returned to me via mail by the recipient (because insurance had already paid and I did not owe them anything). The money was in the hands of the third-party service, not in my account, nor that of my credit union nor the recipient. At first my credit union told me that I would have to contact the third-party service myself and work it out. I said ""NO WAY"" and the credit union did get the money back into account the same day. This is a sweet deal for the third party, who has my money interest-free anywhere from a few days to three months. And risk-free as well, because the money goes directly from my account to the third party service." In addition to the already good answers you also want to consider your time horizon. Unless you are looking out 10+ years, building your down payment in an account that is invested in the market is probably subject to too much market risk. Are you willing to delay purchasing a home by five years if the market turns down at the wrong time? A better option is to just use a savings accounts. To avoid spending the money, you can open a dedicated account. Separate savings account for a special purpose are s common feature at credit unions and probably are available at many regular banks as well. Then for funding the account, many employers allow you to split direct deposits amongst multiple accounts, so you will just need to provide the routing number and fractional amount of your paycheck for that account. I have not opened any NRE/NRO account before coming to Finland.  This is in violation of Foreign Exchange Management Act. Please get this regularized ASAP. All your savings account need to be converted to NRO. Shall I transfer funds from abroad to both NRE and NRO account or I can transfer only to NRE account in India? You can transfer to NRE or NRO. It is advisable to transfer into NRE as funds from here can be repatriated out of India without any paperwork. Funds from NRO account need paperwork to move out of India. I am a regular tax payer in abroad. The Funds which i'll transfer in future will attract any additional tax in India? As your status is Non Resident and the income is during that period, there is no tax applicable in India on this. Few Mutual Fund SIPs (monthly basis) are linked with my existing saving account in india. Do these SIPs will stop when the savings account will turn into NRO account? Shall I need to submit any documents for KYC compliance? If yes, to whom I should submit these? is there any possibility to submit it Online? Check your Bank / Mutual Fund company. Couple of FDs are also opened online and linked with this existing saving account. Do the maturity amount(s) subject to TDS or any tax implication such as 30.9% as this account will be turned into NRO account till that time and NRO account attracts this higher tax percentage. These are subject to taxes in India. This will be as per standard tax brackets. Which account (NRE/NRO) is better for paying EMIs for Home Loan, SIPs of Mutual Funds, utility bills in India, transfer money to relative's account etc Home Loan would be better from NRE account as if you sell the house, the EMI paid can be credited into NRE account and you can transfer this out of India without much paperwork. Same for SIP's. For other it doesn't really matter as it is an expense. Is there any charge to transfer fund from NRE to NRO account if both account maintain in same Bank same branch. Generally No. Check with your bank. Which Bank account's (NRE/NRO) debit/ATM card should be used in Abroad in case of emergency. Check with your bank. NRE funds are more easy. NRO there will be limits and reporting. Do my other savings accounts, maintained in different Banks, also need to be converted into NRO account? If yes, how can it be done from Abroad? Yes. ASAP. Quite a few leading banks allow you to do this if you are not present. Check you bank for guidance. "Bank accounts are free, as are discount brokerage accounts (for stuff like IRA's).  Any time you think there might be an advantage to getting another one, go ahead and do so. I have a number of bank accounts.  Whichever has the best interest rate (typically an online bank) gets the bulk of my cash savings, whichever has the closest ATM gets as much money as I think I might want to withdraw, and I often have a bank account from which my credit cards are paid. Other banks have a token ""just in case I move"" amount of money. The only cost is that you have to check them from time to time to make sure each account has enough for its likely uses.  I use mint.com for that." Paytrust seems to be the only game in town.  We've changed banks several times over the last 15 years and I can tell you that using a bank's bill pay service locks you in, big time.  I loved paytrust because I could make one change if we changed banks.  If you're using a bank directly for your bills, the ides of recreating your payee list is daunting. "But it's also true that the FDIC (or equivalent) insurance account doesn't have enough to cover all deposits.  The FDIC may come in handy if your local FDIC member bank goes belly up and a few hundred depositors need to be made whole.  However, in a national crisis, where the government is ""legally"" stealing funds, that FDIC insurance is a joke.  I do agree though, if you have more than the insured amount in a single account, split it up." "This seems like a risky setup.  All it takes is one missed or delayed transfer for you to overdraw your ""savings"".  There is a benefit to keeping your regular expenses and savings separate, and I can see some benefits in having multiple checking accounts depending on how you organize your finances, but I don't see a benefit to having a paycheck go to one account and all regular spending (and ""savings"") come from another.  It requires some regular maintenance to transfer money over to use for regular spending.  I suppose if you have a checking account that earns interest, but requires direct deposits, and a savings account that earns slightly higher interest you could squeeze out a bit, but it's probably not worth the effort these days unless you have a LOT of money going in and out. Also, it should not be easy to tap into savings, but your day-to-day spending should be very accessible.  All those factors suggest (to me) that your paycheck should go into your regular spending account, and keep your savings separate." "Shem - I recommend looking into online banks or credit unions. I know ally has around ~0.8% rate on their savings accounts NOT MMS. Meaning you don't need a ~$2,500 minimum balance so your money is COMPLETELY liquid. CD's and MMC/S are worth next to nothing, and if you ask me are pointless with the minimum balances they require. Ally also reimburses you for all ATM withdrawal fees, meaning you have complete access to all your money, with next to no minimum, with at least some % back that is comparable to CD rates currently offered. CD's are around ~1.8-2% with tens of thousands of dollars (50-75k+) which isn't worth keeping ""liquid"",if you would consider CD's liquid (because you can withdraw on a penalty or have laddered CD's), unless you're rich and that's your emergency fund. If I were you I would look into a retirement account, and saving what you need to in an Emergency Fund. Check out a 401(k), Traditional IRA or Roth IRA. They each have their benefits and you need to assess your financial situation before picking one. I would recommend spending a great deal of time researching this before making your decision, because switching from one to another could cost you, depending on your choice. This is, of course, if you live in the U.S."