- What is the difference between a bank and a credit union in Michigan?
Both banks and credit unions are depository institutions and offer consumers many of the same services.
A bank is a "for profit" corporation owned by its stockholders and is established to provide financial services to the general public. Bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC). State-chartered banks operate under the authority of and receive powers from the Michigan Banking Code. There are also federally chartered banks that are regulated by the Consumer Financial Protection Bureau (CFPB).
A credit union is a "not for profit" corporation owned by its member depositors and is established solely for the benefit of its members. A Michigan state-chartered credit union operates under the authority of and receives its powers from the Michigan Credit Union Act. There are also federally-chartered credit unions that operate under the authority of the Federal Credit Union Act and are regulated by the National Credit Union Administration (NCUA).
- Is there any difference between a state-chartered and a federally-chartered bank?
A bank can be chartered with state regulatory agencies or with the federal government. This determines what regulations a bank will operate under and who its primary regulator will be. The difference between a federal and state charter has very little impact on consumers and most people would probably not notice it. Our bank locator is a directory of Michigan state-chartered banks. Feel free to search for state-chartered banks at http://difs.state.mi.us/locators?searchtype=ChtBank.
- What is the maximum interest rate I can be charged by the bank issuing my credit card?
Generally, the rate that may be charged is the rate permitted in the financial institution's home state. This is determined by either that state's statutory code, or by the state financial institutions department that has chartered the bank. A Michigan state-chartered depository institution may charge whatever interest rate the institution and the customer agree to.
- What is the maximum amount in my bank account that is insured?
Up to $250,000 per depositor is federally insured. For more information about insurance of bank deposits, contact the Federal Deposit Insurance Corporation at 877-275-3342.
- Can my bank transfer funds from my account without my consent?
A bank can offset funds from an account in good standing to cover a delinquent account (loan payment, credit card payment, etc.). This is referred to as the “Right of Offset” and is generally disclosed in the Account Agreement for your financial institution. By opening the account you agree to all the terms in the Account Agreement.
- Is the bank required to disclose a fee prior to charging it?
By law the bank is required to disclose all fees prior to charging them. Fees are disclosed at the time the account is opened. Typically, a fee schedule is included in the Account Agreement. Any changes to fees after the initial disclosure must also be disclosed in one of the following ways: mailing a notice, posting a notice in the lobby of the bank, or adding the information to the monthly account statement.
- I have a complaint about my bank. Who should I contact?
If your bank is chartered by the State of Michigan, the toll-free number for consumer complaints is 877-999-6442. Problems with banks chartered in other states should be discussed with that state's financial institution’s regulator.
Complaints about national or federally chartered banks should be directed to the Consumer Financial Protection Bureau (CFPB). The CFPB phone number is 855-411-2372 and their website is http://www.consumerfinance.gov/.
If you have questions regarding how your bank is chartered, DIFS can provide you with that information. Please contact us toll-free at 877-999-6442 for assistance
The answers provided are not meant to be a substitute for legal advice.