When choosing where to keep your money, you have two main options: banks and credit unions. They look similar on the surface but have fundamental differences.
The Core Difference
Banks are for-profit companies owned by shareholders. Their goal is to make money for investors.
Credit unions are nonprofit organizations owned by their members (that's you, if you join). Their goal is to serve members.
What This Means for You
| Feature | Bank | Credit Union |
|---|---|---|
| Ownership | Shareholders | Members |
| Goal | Profit | Service |
| Interest rates | Often lower (savings) | Often higher (savings) |
| Loan rates | Often higher | Often lower |
| Fees | Often higher | Often lower |
| Branches | More locations | Fewer locations |
| Insurance |
Advantages of Banks
- Convenience: More branches and ATMs nationwide
- Technology: Often better mobile apps and online banking
- Products: More variety of accounts and services
- Size: Can handle complex financial needs
Advantages of Credit Unions
- Better rates: Higher on savings, lower on loans
- Lower fees: Fewer and smaller fees overall
- Personal service: Known for better customer service
- Community focus: Profits go back to members
The Insurance Question
People worry about credit unions being "less safe." They're not.
- Banks are insured by
- Credit unions are insured by
Both protect your deposits up to $250,000. Your money is equally safe in either.
How to Join a Credit Union
Credit unions have membership requirements, but they're usually easy to meet:
- Live or work in a certain area
- Work for a certain employer
- Be related to a current member
- Join an associated organization (often just a $5-10 donation)
Which Should You Choose?
Consider a bank if:
- You travel frequently and need nationwide access
- You want the latest banking technology
- You have complex financial needs
Consider a credit union if:
- You want better rates on savings and loans
- You prefer lower fees
- You value personal service
- You can meet membership requirements
Best of both worlds: Many people use both—a at a convenient bank and savings at a with better rates.