What's the Difference Between a Credit Union and a Bank?
When it comes to managing our money, the most common options are either credit unions or banks. Banks and credit unions both offer the same products and services, and both are federally insured by their respective government agencies, but what’s the difference between the two, and which is the best fit for your financial needs? Let’s look at some key areas where the two institutions differ.
Ownership and Structure:
Ownership and Structure:
- Credit unions are member-owned, not-for-profit financial cooperatives. Members pool their money to provide loans and other financial services. As a member, you have a say in the credit union's decisions and elect its board of directors.
- Banks are for-profit institutions owned by public shareholders or private investors. They aim to generate profits for their owners.
- Credit unions prioritize personalized customer service. As member-owned institutions, they are strongly committed to meeting the unique needs of their members and the communities they serve.
- While banks also strive for good customer service, their primary focus is profit-making. They may have a larger customer base, making it challenging to provide individualized attention.
- Credit unions typically have lower fees and offer more competitive interest rates on loans and credit cards and high dividend rates on deposit accounts. They are not profit-driven, allowing them to pass on their earnings to members in the form of better rates and fewer fees.
- Banks may have higher fees and interest rates due to their profit-oriented nature. They aim to maximize their own earnings and may prioritize revenue generation over offering the best rates to customers.
- Credit unions often have a strong community focus, serving specific groups or geographic areas. Since they are not-for-profit, all of the money they earn is reinvested into the communities they serve through their more affordable financial products and services.
- Banks generally have a broader customer base and may not have the same level of community involvement as credit unions
- While individual credit unions may have a smaller branch network compared to banks, many credit unions, like Advancial, are part of the Co-Op Shared Branch network. This allows members to access their accounts at various credit union locations nationwide.
- Banks usually have a larger branch network and may offer a wider range of online and mobile banking services. However, some banks may charge additional fees for certain services or have stricter requirements.
