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What's the Difference Between a Bank and a Credit Union?

Bank vs. Credit Union: What's the Difference?

Whether or not you know the difference between a bank and a credit union most likely stems from where your parents held their money. Those who grew up taking trips in the minivan to their bank's local branch with Mom probably aren't familiar with how it differs from a credit union. Now that you're in control of your own money it's up to you to know your options and what type of institution will best fit your personal banking needs. Learn how to tell the two apart when you

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The biggest difference between the two is that credit unions are nonprofits owned by the people who belong to them. Because its customers are partial owners, it tends to produce a high level of customer satisfaction. Unlike banks that will often push their products despite possibly better available options, credit unions aren't focused on profits and recommend what they think is best for the customer and not for the institution. Credit unions are exempt from paying most state and federal taxes and are therefore usually able to offer higher savings account rates and lower rates on loans.

While you may be ready to join a credit union after reading about these advantages, don't act just yet. The biggest deterrent from joining a credit union is their relative inconvenience compared to banks, as they typically have less ATMs and branches and usually lack variety in investment products and services. Banks also tend to have larger variety of products and services that may allow you to centralize your banking needs versus having to keep track of accounts at several institutions.

If you've been searching for a more personal experience then a credit union could be what you need, and you can find one by using the Find a Credit Union website. Choosing a bank or credit union is all about what's suitable for your own personal needs, and not necessarily about where your neighbor holds her cash and can't believe you don't follow suit.

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4peachMoney 4peachMoney 7 years
Before WAMU got bought out, the fees sky-rocketted so that was when I moved into credit unions and I'm happy. I bounce between two CUs and I find the service and benefits are different depending where you go so it pays to shop around. My more friendly, people know my name, no waiting in line, and perks like free umbrellas on rainy days CU is where I do most of my business. My large, employees with attitudes, long lines credit union is the place I squirrel away extra cash--I hate to go there so I'm less tempted to dip into my savings. Call me a nut, but it works.
JennaV JennaV 8 years
I love my credit union but I wish there were more branches. The closest one is about 15 mins away. It is nice to not have to pay all kinds of crazy fees and not have the tellers be all pushing about this and that.
fashionhore fashionhore 8 years
I was at a bank and then switched to the credit union that is pretty prevelant in SE Wisconsin, and I love the experience thus far. I have never had no-hassel banking before my credit union. I hope that I never have to resort to a bank again.
ehadams ehadams 8 years
I was a member of a credit union for over five years and I recently switched to a major bank for the following reasons: 1. Credit union service was very slow. I'd deposit a check and it wouldn't go through for a week or so (probably due to the coop network).2. My credit union itself was far away from me so it was very inconvenient. The coop network is ok, but you can only do so much with it. If you want anything more than withdrawals and deposits you still need to go in to the bank. Also, even in a city like LA the coop networks are not that plentiful. I cant find any by my office in downtown.3. My CU kept randomly doing things like putting money into my checking from my savings for overdraft. For no reason- I had plenty of money in my checkings at the time and no outgoing payments. Then they would have terrible customer service related to it.4. Their savings rates were ridiculously low. 5. They wouldn't raise my credit card limit. They kept it capped at $1000. I have a credit score of 825. WaMu gave me an $8000 credit limit. WTF was my credit union thinking?Additionally, I find large banks to have a lot more options than my credit union did, and I love the convenience of having them everywhere. However I did have a car loan with my CU for 5 years and the interest rate was very low.
ehadams ehadams 8 years
I was a member of a credit union for over five years and I recently switched to a major bank for the following reasons: 1. Credit union service was very slow. I'd deposit a check and it wouldn't go through for a week or so (probably due to the coop network). 2. My credit union itself was far away from me so it was very inconvenient. The coop network is ok, but you can only do so much with it. If you want anything more than withdrawals and deposits you still need to go in to the bank. Also, even in a city like LA the coop networks are not that plentiful. I cant find any by my office in downtown. 3. My CU kept randomly doing things like putting money into my checking from my savings for overdraft. For no reason- I had plenty of money in my checkings at the time and no outgoing payments. Then they would have terrible customer service related to it. 4. Their savings rates were ridiculously low. 5. They wouldn't raise my credit card limit. They kept it capped at $1000. I have a credit score of 825. WaMu gave me an $8000 credit limit. WTF was my credit union thinking? Additionally, I find large banks to have a lot more options than my credit union did, and I love the convenience of having them everywhere. However I did have a car loan with my CU for 5 years and the interest rate was very low.
SDTransplant SDTransplant 8 years
I've been a member of the same credit union for nine years and their service is great for the most part. Even though there aren't any ATMs near where I live, because my CU is affiliated with the COOP network, I can make withdrawals and even deposits at most 7-11 ATMs and certain other credit union's ATMs. It's not bad at all.
Frenched Frenched 8 years
I have accounts in several credit unions as well as major banks and I have to say that it's true: credit unions are way more customer-oriented and personal and actually take your needs into consideration. The best place to apply for loans or refinancement would definitely be a Credit Union.
bellaressa bellaressa 8 years
I with you Tidal, I love ING.
bellaressa bellaressa 8 years
I with you Tidal, I love ING.
TidalWave TidalWave 8 years
@amers230: Go spartans!! Yay!I also wanted to add, that I only use a bank for my checking account (a.k.a. debit card) and use ING for my savings because the interest rate just cannot be beat, without requiring a minimum balance. And since it takes a day or two to get your money out, that just means i am less likely to dip into my savings.
TidalWave TidalWave 8 years
@amers230: Go spartans!! Yay! I also wanted to add, that I only use a bank for my checking account (a.k.a. debit card) and use ING for my savings because the interest rate just cannot be beat, without requiring a minimum balance. And since it takes a day or two to get your money out, that just means i am less likely to dip into my savings.
smashingv smashingv 8 years
I'm happy you made a post about this. I love credit unions! They are inconvenient when it comes to location, but on the other hand, there really isn't any hassel with them. My APR on my credit card is low, I get more in my savings account, and I'll admit I have overdrawn a few times in my past - and when I did, I didn't get charged 50 million times for it! It was one charge plus the amount I owe, that's it (no interest rate!). Of course credit unions vary, but my experience has been great (as opposed to my experience w/US Bank eeesh).
brookrene brookrene 8 years
sweetpeasabrina - my interest rate on savings right now at HSBC is something like 3.15. Try bankrate.com to look for banks that offer moreas for me, i have savings at HSBC, and do my checking through a credit union
brookrene brookrene 8 years
sweetpeasabrina - my interest rate on savings right now at HSBC is something like 3.15. Try bankrate.com to look for banks that offer more as for me, i have savings at HSBC, and do my checking through a credit union
sweetpeabrina sweetpeabrina 8 years
I have both. I use my credit union for my savings. I wish they gave a higher percentage rate. Does anyone know the average percentage rate right now?
amers230 amers230 8 years
i'm an MSUFCU member too (go green!) it was great while i was in college because they're all over east lansing and pretty much every atm was affiliated with them. but now that i moved it's kind of inconvenient. when i get a full time job i think i'm going to switch to a bank, but i'm keeping my credit union credit card, best interest rate ever lol.
ilanac13 ilanac13 8 years
this is definitely informative. to be honest, i don't think that i ever knew what the differences were between the 2 - but i think that i'm going to stick with my bank...even if it means lower rates for savings accounts and less customer satisfaction. i just feel safer with the bank that i'm with. (although i don't know if i should based on how the economy is lately)
TidalWave TidalWave 8 years
I was a member of the credit union of my college, then i moved out of state so it was inconvenient to remain a member. i <i>looove</i> credit unions! i had never had such an enjoyable banking experience! I didn't have to fill out deposit slips or withdrawal slips or anything! I just walked in, gave them my little member card with my account on it, and handed them my money - then they deposited it. And since it was smaller, they were very friendly to me. And had an awesome online banking system. If you are able to become a member of MSUFCU, i highly recommend it :)But now i'm back to banking and I don't like it at all. Everyone just seems rude and no one answers my questions and I hate all the red tape and forms and papers that you need to fill out to do anything at all.The only bank I've enjoyed doing business with is HSBC. but still, it's a bank.
TidalWave TidalWave 8 years
I was a member of the credit union of my college, then i moved out of state so it was inconvenient to remain a member. i looove credit unions! i had never had such an enjoyable banking experience! I didn't have to fill out deposit slips or withdrawal slips or anything! I just walked in, gave them my little member card with my account on it, and handed them my money - then they deposited it. And since it was smaller, they were very friendly to me. And had an awesome online banking system. If you are able to become a member of MSUFCU, i highly recommend it :) But now i'm back to banking and I don't like it at all. Everyone just seems rude and no one answers my questions and I hate all the red tape and forms and papers that you need to fill out to do anything at all. The only bank I've enjoyed doing business with is HSBC. but still, it's a bank.
Shopaholichunny Shopaholichunny 8 years
I'm with a credit union and they have locations all over where I live. They also have ATM's near the places that I shop so needless to say I am quite happy w/ my credit union! ;)
faerymagick15 faerymagick15 8 years
We have our savings account at a credit union and our checking at a bank. Its worked ok so far.
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