Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Personal Finance Banking. Table of Contents Expand. Credit Unions vs. Banks: An Overview. Credit Unions. Key Differences. Special Considerations. Credit Union vs. Bank FAQs. The Bottom Line. Banks: An Overview When you're deciding where to open your financial accounts, you may wonder: Should I go with a bank or a credit union?
Key Takeaways Credit unions tend to have lower fees and better interest rates on savings accounts and loans, while banks' mobile apps and online technology tend to be more advanced. Banks often have more branches and ATMs nationwide. Credit unions are known for providing better customer service, while large national banks tend to have stricter rules and less flexibility in decision-making.
Emphasis on strong customer service. May have low or no-fee accounts and services for customers. Pros: Offer a wide range of banking, loan and retirement products. Larger banks offer convenience with access to multiple branches, ATMs, and online and mobile banking technology. Cons: Few financial products. Inconvenience due to lack of branches.
Potentially no mobile banking. Potentially low-tech banking online. Cons: Potentially higher interest rates on loans. Less emphasis on personalized customer service. Most checking and savings accounts come with high fees. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
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Credit unions have rules regarding who can join them. These rules may include requirements such as living in a specific geographical region, working for a specific employer, or going to school. Once you join a credit union, you can remain a member for life, even if you no longer meet the initial requirements for becoming a member. But your credit union may require that you maintain a savings or share account in good standing in order to keep your membership.
Once you have that account, you can borrow money, open a checking account, or apply for a credit card. It may take some research, but finding a credit union that you can join is worth the effort. Many large companies offer memberships in credit unions, so start your search at your workplace. If you don't work for a large employer that provides credit union memberships, you may need to look around your geographic area or online to find one.
Credit unions don't belong to the FDIC as banks do. As you shop around for a credit union that meets your needs, make sure the one you choose belongs to the NCUA so your funds are protected. In addition to imposing membership requirements that you may not be able to meet, credit unions tend to be smaller than banks, which can make it difficult to find a branch or an ATM when you travel or move. Many credit unions don't charge ATM usage fees within their networks, but if you're away on a regular basis, then a credit union may not be your best option.
You may also have fewer options at a credit union than at a bank. Large banks usually offer a wide variety of checking and savings accounts, credit cards, loans, and investment accounts.
You have more options to find the one that gives you the highest rewards and best suits your situation. Your local credit union may offer only one or a few types of each with no rewards. Another issue is that credit unions may not always stay abreast of cutting-edge banking technology, so your online experience may be limited to checking your balances and transferring funds between accounts. Before you commit to a credit union or a bank, delve into both and read all the fine print associated with each product you're interested in.
If a high level of personal service, better interest rates, and lower fees are more important to you than sophisticated tech, more convenience, and an extensive menu of banking products, then a credit union may be the choice for you. Or you could opt to open accounts at a bank and a credit union to take full advantage of the benefits afforded by both.
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But what is a credit union? Unlike banks, credit unions are owned by the members they serve. This means that any profits can be given back to credit union members in the form of lower fees and higher savings rates. A lot of credit union members like the idea that their checking and savings accounts help other members of the credit union get mortgages to buy their first homes or secure business loans to build the businesses of their dreams.
Since credit unions are not-for-profit financial institutions, they can focus on providing better services for their member-owners. You can potentially benefit from this in a variety of ways. Credit unions may go above and beyond to help their members reach financial success through personalized service.
Since credit unions are not-for-profit institutions, they can focus on helping members with their individual financial needs. Some credit unions also provide training and counseling to help members understand complex financial matters. Unlike for-profit banks, credit unions can give profits back to their members in the form of higher interest rates on products like CDs and savings accounts. Credit unions tend to have lower fees.
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