Credit unions vs. banks: which option is best for me?

Banks and credit unions, both financial institutions, have many similarities. But their differences are significant enough for prospective members to consider.

For-profit vs. nonprofit: The most notable difference is that banks are for-profit enterprises owned by investors, while credit unions are nonprofit entities that are owned by their members. In other words, when you open an account at a credit union, you become a member and own a share of the organization.

Regional vs. broader reach: Credit unions usually have more of an emphasis on serving the community. Some banks are national, with branches in more locations throughout the country. While credit unions tend to be regional, they are often part of a shared branch network that lets members of one credit union use the services of another one in the network.

Both insured: Banks are insured by the Federal Deposit Insurance Corp. (FDIC) – each depositor is insured up to $250,000. Credit unions are insured by the National Credit Union Administration (NCUA) – which similarly insures each share owner up to $250,000.

Interest rates and fees: Because many credit unions are regional and member-owned, they often offer lower rates on loans and higher interest on savings accounts and certificates compared to banks. Banks are profit driven, and usually offer lower interest rates on their savings and higher rates on their credit products.

Technology: While there is a misconception about banks having better technology, many credit unions have kept up the pace and offer similar services, like flexible communication through their website, online banking and mobile apps.

If you want to learn more about credit unions, or if you are ready to join one, reach out to us on our website or get in touch with a representative.