When you are saving your money, you need a place to put it. You can’t tuck it under your mattress, so it needs to go to an institution designed for holding money. That can either be a bank or a credit union. They share many similarities, but they also have a few differences.
For-Profit or Not-for-Profit
Banks operate at for-profit and credit unions operate as a not-for-profit. This makes a big difference when it comes to the products they offer. Because banks operate as a for-profit, they are going to charge more for interest on loans they give out. They will also offer less in interest on their saving, checking, and money market accounts. Credit unions, on the other hand, offer more in interest on these accounts and charge less on their loans because they aren’t in business to make a profit
When it comes to ownership, credit unions are owned by their members/customer, and banks are owned by investors. Credit unions don’t have investors breathing down their necks to get them to make more money; this will help similarly to the for-profit/not-for-profit.
Credit unions, more often than not, operate within a region, so accessing your bank in different areas can be a challenge. They do offer, however, a network of other credit unions that you can use for standard transactions, like deposits and withdrawals, for free. Check with your credit union for specifics.
Banks can operate within a region and also nationwide.
Large national banks are much quicker in rolling out new technologies for the benefit of their customers.
Credit unions tend to focus more on their customer service than the large banks do. Regional banks, however, have similar customer service to credit unions because they are interested in serving their community.
As I said earlier, banks and credit unions have their similarities, but they also have some key differences. Generally, credit unions will be less expensive on fees and a little more generous on interest offered on their accounts. Banks and credit union accounts are both protected by a federal agency, up to $250,000. Each has their unique advantages and disadvantages, so do your research to see what will be best for your particular situation.