Now that you know what a credit union is and how they operate, let’s explore credit unions vs. banks.
Ownership
Banks: Banks are for-profit organizations owned and run by shareholders. The main goal of banks is to maximize profits for their shareholders.
Credit Unions: As member-owned non-profits, credit unions are technically financial cooperatives where members have voting rights.
Membership
Banks: Both individuals and companies can open an account with a bank.
Credit Unions: Some credit unions are very restrictive about who can join, while others are open to anyone willing to pay a membership fee.
Products and services
Banks: Banks offer an assortment of personal and commercial banking services. Some product offerings include loans, credit cards, and investment accounts like certificates of deposits (CDs) and individual retirement accounts (IRAs).
Credit Unions: Credit unions tend to offer fewer products than banks, especially when it comes to commercial banking products. Credit unions also typically offer fewer investment products, limited to checking and savings accounts and credit cards.
Rates and fees
Banks: Banks typically have higher interest rates on loans and lower interest rates on deposit and savings accounts. Traditional banks also tend to have more and higher fees on accounts and services than credit unions.
Credit Unions: Credit unions typically offer low- or no-fee banking accounts and services. Credit union-loan interest rates tend to be lower, yet their interest rates on savings products are typically higher than banks.
Deposit insurance
Banks: Banks are insured by the Federal Deposit Insurance Corporation (FDIC), which provides deposit insurance for up to $250,000 per depositor, per account.1
Credit Unions: Credit unions are insured by the National Credit Union Administration (NCUA). Like FDIC insurance, NCUA insurance guarantees up to $250,000 per person, per account.2
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