Credit Unions Vs. Banks

If you're debating between a credit union or a conventional bank, it’s important to keep in mind the vital distinctions such as rates of interest and branch accessibility to identify which elements are essential to you. Let’s list some primary differences below to help you decide which is the right choice for you.  

The Important Distinction

On the surface, banks and credit unions may appear very similar. After all, both are equipped to accept those convenient automatic deposits. Both are also able to provide people access to checking and savings accounts, credit cards and loans. The differences lie at the very core of the operations, and they’re significant. Banks are for-profit institutions that generally strive to earn shareholders money. Credit unions are not-for-profit, member-owned cooperatives. Essentially, account holders are a means to an end for banking institutions. At credit unions, members are served each and every day. Credit unions exist to offer a group of individuals linked by a certain bond which might be based upon location, company, belief, subscription, or various other variables.

Considering the fundamental differences between banks and credit unions, members of a credit union are likely to find a high level of service is provided to them no matter how much – or little – money is placed into an account. Credit union membership also tends to provide individuals with benefits that go beyond service, including:

•             Higher interest rates on deposit and investment accounts – Credit union members typically receive a higher return on their financial investments, such as savings accounts and certificates of deposit. Since credit unions work on members’ behalf and not shareholders, profits made benefit members directly.

•             Low interest rates on credit cards and loans – Credit unions are also generally able to provide their members better rates on money borrowed. Since credit unions do not have to earn huge profits to satisfy shareholders, they reinvest money earned for their own members. Oftentimes, that reinvestment translates into lower rates.

Making the Best Decision for You

People have many choices on where to put their hard-earned dollars. Credit union membership provides a distinct advantage for people who wish to enjoy a higher level of service and greater value attached to the financial accounts they hold. From lower rates on loans to higher earnings on savings, credit unions are all about serving their members.

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