Credit Unions vs. Banks: An Overview

Bank and credit unions have several similarities and differences to consider. Both offer the same general services, such as checking and savings accounts, as well as various loan options. Your deposits in both credit union and bank accounts are federally insured for up to $250,000 per account, per account holder.

B🌠anks and credit unions usually have different ownership models. Banks tend to be for-profit institutions owned by shareholders that offer banking services regionally or nationally. Conversely, cred🦩it unions are usually non-profit entities owned by their members and serve their local communities.

However, you will find differences in fees, interest rates, product offerings, convenience, and customer service, although each financial intuition differs. Credit unions tend to offer lower fees and interest rates on loans and credit products, as well as more personalized customer service. However, banks may offer more variety in loans and other financial prod𓂃ucts and more extensive networks that can make banking more convenient.

Banks

澳洲幸运5官方开奖结果体彩网:Commercial banks, or retail banks, may be owned by investors or privately owned. Banks operate as for-profit institu🦂tions. Anyone can ope🐬n an account with a bank, whereas credit unions have membership requirements.

There were 4,026 FDIC-insured commercial banks with roughly $22.5 trillion in assets as of Dec. 31, 2023. Banks can range from one-branch community banks to larger regional and national banks.

Commercial banks typically offer various banking products to consumers and businesses, including checking or savings accounts, 澳洲幸运5官方开奖结果体彩网:personal loans, auto loans, or mortgages. Banks may provide investment and saving vehicles like 澳洲幸运5官方开奖结果体彩网:individu🅰al ret꧃irement accounts (IRAs), 澳洲幸运5官方开奖结果体彩网:certificates of deposit (CDs), and 澳洲幸运5官方开奖结果体彩网:money market accounts.

Bank deposits are federally insured for up to $250,000 by the 澳洲幸运5官方开奖结果体彩网:Federal Deposit Insurance Corporation (⛄FDIC), so your funds will be safe in the event of a bank failure.

Credit Unions

澳洲幸运5官方开奖结果体彩网:Credit unions are not-for-profit financial 🌺institutions owned by their members. They provide many of the same products and services as banks, including checking and savings accounts as well as various loan products and investment accounts like IRAs.

Deposits in credit union accounts, like with banks, are federally insured for up to $250,000, but by the 澳洲幸运5官方开奖结果体彩网:National Credit Union Administratioꩵn (NCUA) instead of the FDIC.

More than 140 million people belong to a credit union. Credit union members can vote on credit union policies and participate in decisions. According to an NCUA 2023 annual report (latest report), 4,604 federally insured credit unions held assets of around $2 trillion.

Credit unions must limit their customer base to an NCUA-approved “field of membership,” such as a workplace, school, place of worship, or geographic area. 澳洲幸运5官方开奖结果体彩网:National credit unions want to increase membership, so they may offer broader fields of membership, such as accepting members of a specific organization, large company, or broad geographic area.

Credit unions' profits are returned to members through benefits such as lower fees and better interest rates. According to CUNA estimates, the financial benefits provided to credit union members are equivalent to $179 per member or $376 per member household.

Credit unions were initially developed to provide limited banking services to moderate-income people within a narrow field of membership. As a result, credit unions are exempt from federal income taxes.

Key Differences

Fees

Fees can play a significant role in choosing a financial institution. Credit unions tend to charge lower fees than banks.

Other 2021 research released by the Consumer Financial Protection Bureau noted that credit unions had lower overdraft and 澳洲幸运5官方开奖结果体彩网:non-sufficient funds (NSF) fees.

However, 澳洲幸运5官方开奖结果体彩网:dozens of fees may be charged by institutions, including monthly account maintenance fees, ATM fees, foreign transaction fees, debit card replacement fees, and other fees. Carefully review any fees important to you. You may be able to find a low-fee or fee-free account at either a bank or a credit union.

Branches and Other Access

While in-person access may not be as important as it once was, many people still desire convenient branch options and ATM access. If you frequently visit a physical branch for consumer or business services, carefully consider a financial institution's branch network.

Banks get 澳洲幸运5官方开奖结果体彩网:high🌠er customer satisfaction rat♓ings for the number and location of ATMs and branches, compared to credit unions as surveyed by the American Customer Satisfaction Index survey. National banks lead in customer satisfaction with the highest ratings for both ATM and branch numbers and locations.

A credit union tends to have fewer branches on average than banks. For example, the nation's largest bank—Chase—has more than 4,700 branches.

To offset this disadvantage, credit unions have formed a CO-OP Shared Branch network with more than 30,000 ATMs and 5,000 shared branches nationwide. At shared branches, members can perform many in-person tasks.

Interest Rates

Credit unions typically offer 澳洲幸运5官方开奖结果体彩网:higher interest returns on some products and lower interest rates on lending products.

A comparison from Q1 2023 through Q3 2024 shows that credit unions tend to provide higher returns on certificates of deposit and money market accounts while 澳洲幸运5官方开奖结果体彩网:lower rates on loans and other credit products. However, banks offered higher average returns on 澳洲幸运5官方开奖结果体彩网:interest checking and 澳洲幸运5官方开奖结果体彩网:savings accounts.

Credit unions offered more competitive interest rates on loans and credit p♑roducts compared t🎐o banks for the following:

• 澳洲幸运5官方开奖结果体彩网:Credit cards
• 澳洲幸运5官方开奖结果体彩网:Fixed-rate mortgages
• 澳洲幸运5官方开奖结果体彩网:Adjustable-rate mortgages
• Unsecured fixed-rate loans
• 澳洲幸运5官方开奖结果体彩网:Home equity loans
• Used car loans
• New car loans

In some cases, the rate differences were slight. However, credit unions tended to offer significantly l🦹ower raꦗtes on average for credit cards and auto loans.

Customer Service

While customer service is often touted as more of a credit union benefit, the American Customer Satisfaction Index's 2024 survey indicates that banks are slightly stronger in this area overall.

However, the difference is almost negligible, with both credit unions and banks posting similar scores in different categories across the board, such as in courtesy and helpfulness of tellers or other staff and the speed of in-branch financial transactions. The highest-ranked customer service scores are with regional and community banks.

Product Offerings

ASCI customers scored credit unions slightly lower for various financial services available, including checking, savings, debit/credit cards, and loans. Banks score higher in this regard.

For example, many large national banks offer international banking services🏅 and products for those who often travel or live abroad. While some credit unions may offer𓆉 these services and products, it's uncommon.

When comparing credit cards, national banks dominate our list of best credit cards. Credit union cards tend to focus more on offering lower interest rates versus rewards and perks.

Mobile App

Customers gave banks a slightly higher score for website satisfaction and mobile app quality and reliability in the ACSI survey for 2024. However, like most categories, the score differences were negligible.

You can still find excellent digital banking options at many national credit unions. Investigate mobile banking technology and check websites for simplicity and services.

The Bottom Line

Credit unions can be ideal for a low-interest loan, lower mortgage closing costs, or reduced fees, but you'll need to qualify for membership. Larger banks may offer you more choices regarding products, apps, and international or commercial products and services; and anyone can join.

Smaller community and regional banks may give you more customer service for your buck if that's essential to you. Weigh the pros and cons of each type of financial institution to decide which best serves your needs.