How Much of Your Deposits are Held at Credit Unions?

Last week I asked "How Much of Your Bank Deposits Are Held At Internet Banks?" Out of 98 readers who voted, 58% responded that they had at least 70% of their deposits at internet banks. Some commenters in that post suggested asking another question in a poll: what percentage of your deposits are held at banks vs credit unions? That was a good idea. So for today’s poll, how much of your deposits are held at credit unions as opposed to banks?

This poll should be more straightforward than last week’s poll. There are only two types of institutions in the U.S. that can hold federally-insured deposits: banks and credit unions. For simplicity, I include thrifts in the bank category. Thrifts (also called savings and loan associations) are FDIC-insured just like banks, and from a depositor point-of-view, they can be considered equivalent.

Last week’s poll was complicated by the definition of internet banks. As several readers mentioned in the comments, the definition of an internet bank is a little fuzzy. Some might define an internet bank as any institution where they open accounts online rather than at a branch. Others may define it as a bank that has no branches and only takes deposits from the web.

How Total Bank and Credit Union Deposits Compare

Banks still hold a much larger percentage of overall deposits as compared with credit unions.

I was able to get some numbers from the FDIC and NCUA. The following shows how total deposits at all credit unions and banks have changed from December 31, 2011 to December 31, 2012:

• Bank deposit change in 2012: $10.186 trillion to $10.817 trillion (+6.19%)
• CU deposit change in 2012: $827 billion to $878 billion (+6.17%)

As you can see, banks still hold a much larger percentage of deposits. This makes sense based on the size of the megabanks. As I showed in 2011, the deposits at one of the megabanks is larger than the total deposits of all credit unions.

Another thing to note is that for both banks and credit unions, deposits have grown about the same. Before 2012, there were several years of higher deposit growth at credit unions. This SNL article shows this growth with a chart. There’s also a table that shows the deposit growth at the top five banks and the top five credit unions from 2006 to the first quarter of 2012.

Factors That Can Affect Savers’ Allocations Between Credit Unions and Banks

For savers who are very concerned with interest rates, I think we’ll see more of their deposits being held at credit unions. The reason is that credit unions often have the best rates. This has been especially true for CDs. For the last several years, the best CD deals have come from credit unions like PenFed, Navy Federal, Melrose, Patelco and DCU. If you keep most of your deposits in CDs, my guess is that most of your deposits are held at credit unions.

Even though credit unions often have the best CD rates, that hasn’t been the case with savings and money market accounts. There have been a few exceptions with credit unions like Alliant and Connexus, but in general, the best savings account rates have been at internet banks. Due to the low interest rates, some savers have been shifting their allocation from CDs to savings accounts. So savers may be finding that more of their deposits are now at internet banks.

Savers who want to keep more of their money in liquid accounts have another option besides savings and money market accounts. They can also earn high interest by keeping their money in high-yield reward checking accounts. Many of the best reward checking accounts are at credit unions. So that may keep more of savers’ deposits at credit unions.

Are you sticking with credit union CDs? Or are you moving more money into liquid accounts like money market and reward checking accounts? And are those liquid accounts at credit unions or at banks?