Traditional banks have long been the go-to choice for managing finances. However, credit unions offer similar services with personalized attention and lower fees. If you seek a better banking alternative, consider credit unions. Understanding their distinctions is crucial for making informed decisions that suit your financial goals.
Not-for-profit
All profits are returned to members
Member Focused
Insured by NCUA up to $250,000
Volunteer board of directors
Community-based
For-profit
All profits go to stockholders
Stockholder focused
Insured by FDIC up to $250,000
Paid board of directors
Typically large, nationally based
Credit Unions: Member-owned financial institutions operating as not-for-profit organizations. Their profits benefit members through better rates, lower fees, and democratic decision-making.
Banks: For-profit financial institutions owned by stockholders who control all decision-making. Profits are returned to stockholders, not bank customers.
Credit Unions: Customers at credit unions are called members. As a member, you are part owner and share the credit union’s vision and profits. Becoming a member is simple! Learn more about credit union membership.
Banks: Customers at banks are simply account holders and don’t share in the bank’s ownership, vision, and profits.
As a credit union member, you’ll have privileges banks can’t offer:
Higher interest rates on savings accounts
Fewer or lower fees
Lower interest rates on loans and credit cards
Individualized lending flexibility
Voting rights to vote on bylaw changes, charter
Changes, mergers, board elections, and more
Credit Unions: At credit unions, you are more than just an account number. As member-owned not-for-profits, credit unions focus energy and training on high-quality customer service. They don’t push the latest financial product to hit a sales quota; they tailor their product recommendations to match their members' needs.
Banks: Their primary focus is maximizing shareholder value, which may impact customer service.
Credit Unions: Many credit unions prioritize reinvesting back into the communities they serve, often in partnerships with local businesses, schools, nonprofits, and government agencies.
Banks: While some banks may also engage in community involvement activities, their primary focus is typically on maximizing shareholder value.