There are many financial institutions available to choose from. While your money will be kept safe in either a bank or credit union, there are decisions to be made about which one is best for your personal needs. Below, we will list the basic differences between banks and credit unions.
Use of Funds
Both institutions make money on loaning money out with the agreement of being re-paid with interest. There are also various fees that can be charged. But the biggest difference between the two types of institutions is that credit Unions are not-for-profit organizations that give returns back to their members. Banks are for-profit organizations run by shareholders, and their main goal is to maximize profit for the shareholders.
Interest Rates and Fees
A credit union typically offers more competitive interest rates, maximizing the benefits for the member. They are also able to charge less for fees because their not-for-profit status saves them money on taxes that a bank would have to pay.
Banks may charge higher fees and interest rates to maximize the benefit to the stakeholders. However, not all banks and credit unions are this way. It is best to shop around when looking at interest rates and fees to find the best situation for you.
Banks typically have more availability for more lending and saving options, such as construction loans, student loans or trust accounts. Many credit unions may still offer these services through a partner company. Services you will typically find at both banks and credit unions:
- Checking Accounts
- Savings Accounts
- Customer Service
- Mobile Banking
- ATM Services
- Auto Loans
- Mortgage Loans
Banks are able to offer public membership eligibility, while credit unions are required to adhere to a field of membership. This ‘field of membership’ criteria may include living within a specified area, being a student or employee of a specific school, or even being a family member of someone who meets one of these criteria.
Is My Money Protected in a Bank or Credit Union?
Your money is just as safe in a credit union as it is in a bank. Money kept in banks is insured by the FDIC. Federally insured credit unions offer NCUA insurance. Both are federal insurance backed by the U.S. government.
Each person may have different needs for the safe keeping of their money. Check out multiple banks and credit unions to decide which will work best for you.
Here at Ascent Credit Union we offer many services and products. We are here to help answer any questions you might have. Contact our Help Center HERE