Banking with a Bank vs. a Credit Union
We all have to bank somewhere, but figuring out exactly where is a time-consuming and confusing task for a lot of us. Whether you’re looking to open a checking, savings, or credit account, you’ll
have to figure out whether a bank or credit union is the right fit for you.
What is the difference between a bank and a credit union?
Credit unions generally have lower interest rates.
On average, credit unions offer lower interest rates than banks. The National Credit Union Administration releases quarterly reports every year on average interest rates for banks and credit unions on a variety of loan types.
Credit unions generally have less rigid eligibility requirements.
Most individuals are eligible to bank with a credit union. Check out MyCreditUnion.gov to find a credit union near you and see if you’re eligible.
Banks are for-profit, whereas credit unions are not for profit.
Banks are for profit, which means that they’re privately owned or publicly traded. This is not the case for credit unions, which are non-profit institutions.
Banks offer more physical branches and greater convenience.
Banks generally offer many more physical locations that credit unions. This can be very convenient when you need to quickly hit an ATM, make a deposit, or speak with a teller.
Banks generally offer more mobile apps, tools, and digital features.
Generally, because banks are bigger, they offer a wider range of mobile apps, tools and services.
What remains the same whether you bank with a credit union or bank?
Both have equally great insurance coverage.
Although credit unions and banks are insured by different institutions, then surname coverage is very similar. Credit unions are insured by the National Credit Union Administration, and banks are insured by the Federal Deposit Insurance Corporation.
Both generally offer a range of financial literacy resources.
Both credit unions and banks generally offer some sort of financial literacy resources online or in-person. This is a great thing to take advantage of if you need to learn more about finances.
We talked to a couple people about why they choose to bank with a credit union or bank, and here’s what they had to say.
“I choose to bank with a credit union for a variety of reasons. I originally had accounts with a large bank, but ran into a couple issues with harsh penalties and lack of customer service. Because of this, I chose to switch to a small credit union. Although I have to drive a bit farther to get to physical branches, my accounts now have better interest rates and perks, and I’m always guaranteed good customer service.”
“Growing up in a smaller city, I was with my family’s local credit union. As I moved away for school, it became increasingly harder to make deposits and get one on one help with limited branches. I switched to a big bank for easier access and the variety of credit card options as well. So far, I am happy and it links seamlessly with more apps since it’s widely known.”
There are pros and cons to both credit unions and banks; it’s all about deciding which is the best option for you, and which type of institution will have the specific things you need. If you need some more help deciding, pop into the MoneyVerbs app and ask our community.