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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


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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