The Comparison Between Banks & Credit Unions

Owners

A credit union is owned by the members. Opening the account means you own a small part of the business. Membership is sometimes restricted to employees of a particular company or other identifying factor, but more credit unions are expanding to allow anyone residing in a certain area as members. Credit unions are not-for-profit so they aren't as worried about how much money they are going to make off of members. The money a credit union makes beyond the operating costs goes back to the members in the form of dividends. Banks are run by corporations and are for-profit ventures. In some cases, banks lose sight of the customers and focus on the profits they make.

The fees are generally lower at a credit union than at a bank. Since the credit union isn't working for a profit, it is possible to charge lower fees and limit the number of fees charged. Banks are more likely to charge higher fees. They may also charge for services that a credit union provides for free. Examples of possible fees include transfers, out-of-network ATM use and copies of past statements or checks. Check with each financial institution before opening an account to determine exactly what fees you will pay and how much they cost each month.

Members of a credit union receive lower interest rates than they might receive at a bank on loans. Since banks are trying to make a profit, they can't offer as low of rates. Larger banks have an advantage in the loan options available. Credit unions may not have as many different types of loans to choose from so your options may be more limited.

Saving account rates are often higher at credit unions. You may also benefit from lower maintenance fees on the savings account.

The range of services varies based on the size of the institution. Larger national banks typically offer more services to customers. Extensive ATM networks, online banking, online bill payment services and business services for small business owners are examples of services that are sometimes missing from a credit union. When choosing between a bank and credit union, make a list of the services you want. Compare what each local option offers to find the best place for your money.