Credit Unions vs. Banks: Compared

There are many options available when it comes to finding the best place to put your everyday cash.

If you’re deciding between a bank or credit union, here’s what you should consider about the two types of financial institutions, as the differences between them may affect which place you choose for your checking account, savings account, and certificate of deposit.

The major difference between the two types of institutions is this: banks are for-profit enterprises and credit unions are not-for-profit. Credit unions basically exist to serve a community of people tied together by a ‘bond of association’ which may be based on either location, employer, faith, membership in other organizations, or other varying factors.

A credit union will provide financial products on the most favorable terms possible, to serve its community. This means that rather than offering accounts to customers and large dividends to a smaller group of owners, as with banks, a credit union will offer small dividends, as well as discounted loan rates and other benefits, to a large group of members.

Why Should You Choose a Credit Union?

– It usually has higher interest rates on deposits.

– It places an emphasis on customer service.

Why Should You Choose a Bank?

– It has more branches in your region or across the country.

– It is usually quicker to roll out new apps and other tech.

What Should You Ask when Making Your Choice?

Ask what fees the bank or credit union charges, and how much they amount to. Enquire about monthly maintenance as well as overdraft fees. Credit unions traditionally have been observed to be cheaper for checking accounts, but that may no longer be true. The only way to know for sure is to check with each of the institutions.

Ask about how many branches and ATMs they have, and if in-person service matters to you, consider banks and credit unions that have local branches. If you only need to withdraw or deposit cash sometimes, ensure you have enough accessible ATMs nearby.

Also, don’t forget to ask about what interest rates the bank or credit union offers. Look at the interest rates on whatever accounts you’re thinking about from different banks and credit unions.