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Online Banks vs. Credit Unions

Online banks operate without branches. But what else may they be lacking?


2020 was a year when everyone was required to stay “safer at home”, and the use of online-only banks increased faster than it would have without a pandemic. So, you may have been hearing about online banks more often and wondering what online banks are all about or how they compare to a traditional credit union.

What is an online bank? Online banking means managing your accounts with a computer or mobile device. This includes transferring funds, depositing checks and paying bills electronically. However, with an online bank (also knowns as FinTechs, or digital banks) there are no brick and mortar buildings associated with the provider and you’ll never meet a member service representative face to face.

la financial app logo icon - blue la logo with white background

You may be wondering: “Wait, doesn’t LA Financial have all these online features too?” And the answer is: YES! And, because of the COVID-19 pandemic and the changing banking habits of our members, the Credit Union has implemented new online features so that we can meet of all your needs from the comfort of your home. We understand that needs are shifting from more in-person experiences to online and we try to support our members in all the ways they like to interact with us.

Have you used Online Banking with us or downloaded our mobile app? See how you can enroll in Online Banking and view your accounts from where ever you are. Download our app for iOS or Android devices today. 


While online banks pride themselves on easy accessibility, and sound security measures, there are some areas that online banks lack, where credit unions shine.

6 drawbacks to online-only banking

1. Your funds may not be insured

It is imperative to double check the details of any account you open, in order to make sure that your money is federally insured.  As online banks are a somewhat newer platform, these providers face a myriad of new regulations, which has a learning curve. Many FinTech start ups don’t have the backing of federal institutions like NCUA (National Credit Union Administration) or FDIC (Federal Deposit Insurance Corp), like credit unions and banks do. Protections for consumers may be more limited with digital banks. It’s important to understand this can make a huge difference in an instance of fraud, or even an economic crisis – and whether or not you’ll see all of your money again.

See the steps we, as a credit union, are required to take in order to protect your funds and learn which kinds of accounts are protected.

2. No branches to help you

With an online bank, prepare to have limited access to in-person help. You won’t be able to walk into your bank and talk to a manager if there’s an issue. Most online bank assistance happens through website chat services, which can be useful, but if you’re not getting the answer you need, it may be difficult getting a hold of an actual person to help you.

Credit Unions work with a member-service centered attitude. We make communicating to and helping our members our highest priority so that you’re always getting what you need out of your financial institution, whether that’s in-person, by phone, or online.

bank teller handing a member a check at the teller desk
3. Cash can be hard to deposit

Online banks can make it difficult if you deal mostly in cash. You might need to find a deposit-taking ATM or put the money into a traditional bank account and then transfer it to your online account.

4. Paying others

Sometimes you’ll need to send other forms of payment beyond regular online bill pay. In terms of cleared funds, if you need to pay somebody with a cashier’s check, an online bank account may slow you down – requiring you to order a paper check and wait for it to arrive in your mailbox.

5. Fewer one-stop-shop options

Some online banks offer savings accounts but don’t offer checking or share certificates, or they may not offer any lending solutions. This leads to you using multiple institutions to keep your money and having to transfer your funds between them.

6. When your online bank goes offline

What happens to you if your online bank goes down? That card you’re trying to pay your meal with will get declined. Online banks have been known to go down, creating problems for their users. Most are fixed quickly, but this could really put you in a jam if you’re unable to access your funds when you need them most.

Thanks to NCUA, the Credit Union is the safest place to store your hard earned cash. We’ve added the benefits of online banking while having the security of being able to speak with you and access your funds, in person, when you need. 

We’ve expanded our call center hours and some of our branch business hours to help assist you at the times that are easiest for you.
Is My Money Protected?
How do you know if your institution is insured? The vast majority of banks and credit unions in the US are. To confirm that your institution is covered, you can check their website or talk with a representative by giving them a call or stopping by a branch. (LA Financial Credit Union and Havasu Community Credit Union are federally insured up to $250,000 by NCUA.)


Learn more about Your Insured Funds


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Disclaimer
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

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