Many people may not know what the differences between banks and credit unions actually are! The difference between credit unions and banks boils down to a few key features.
Credit unions are not-for-profit organizations that are owned by their members and re-invest their profits back to their members in the form of low fees, low rates and other benefits. Banks are for-profit companies owned by investors where customers do not have a vote in bank management decisions.
Both banks and credit unions are financial institutions that offer various products and services to help customers manage money. And most times, smaller credit unions offer just as many account, loan and service options as the big banks.
Credit unions pride themselves on working to best serve their members and their community at all times. Credit unions require you to meet membership criteria within their membership parameters, while banks may serve by state or have no restrictions on becoming a customer. However, with a credit union, your membership means more as your first deposit makes you a member-owner of the institution.
Below we’ve summed up the major differences between banks and credit unions for a quick overview.
|For-profit institutions||Not-for-profit institutions owned by members|
|No membership required||Membership required|
|Higher fees & lower savings rates||Lower fees & higher savings rates|
|Offer a wide array of products & services||Offer a wide array of products & services|
|FDIC provides deposit insurance||NCUA provides deposit insurance|