What are the key differences between credit unions vs. banks? Savvy consumers know credit unions operate as nonprofits. Learn the pros and cons of each option.
Looking to open a checking account or apply for a loan? You likely see commercials and billboards for a plethora of financial institutions, but it proves difficult to choose which one to entrust with your financial needs. One of the first decisions to make is whether to go with a credit union or a bank. Learn the key differences between banks and credit unions to decide what’s right for you.
Differences Between Banks and Credit Unions
The primary difference between banks and credit unions is that banks are for-profit and credit unions are nonprofit organizations. Each comes with unique benefits and challenges, which we’ll outline below.
Banks: Pros & Cons
Since the majority of banks have been in business longer than credit unions, consumers may perceive them as more trustworthy. But that’s not a reason to choose a bank. Check out these pros and cons.
- Pro: Wider branch availability.
- Pro: More personal and commercial products, such as business loans, IRAs, and money marketing accounts.
- Pro: Better technology features for mobile banking.
- Con: Higher banking fees.
- Con: Higher interest rates on loans.
- Con: Lower interest rates for savings.
Credit Unions: Pros & Cons
Looking to bank with a smaller, nonprofit institution? Read on for the pros and cons of credit unions.
- Pro: More personalized customer service.
- Pro: Lower loan interest rates.
- Pro: Higher interest rates earned on savings accounts.
- Con: More eligibility requirements to bank there.
- Con: Fewer branches and ATMS.
- Con: Fewer product offerings.
Similarities Between Banks and Credit Unions
While we highlighted the differences between banks and credit unions above, they have some similarities worth reviewing.
Insurance: While the insurance comes from different sources, credit unions and banks both insure your accounts up to $250,000. The Federal Deposit Insurance Corporation (FDIC) provides insurance to banks, while the National Credit Union Administration (NCUA) insures credit unions.
ATM Availability: While banks typically offer more ATMs, some credit unions belong to cooperative networks to allow you to bank at other credit union ATMs.
Board Professionals Rely on OnBoard
Today’s consumers have an important choice to make when choosing between a bank or credit union. Before applying for a new account, weigh the pros and cons of credit unions vs. banks carefully.
Since credit unions operate as nonprofits, they have a nonprofit board of directors responsible for providing general direction to the credit union and representing the best interests of its members. A very important role requires the best tools, and hundreds of credit unions trust OnBoard with their boardroom needs.
What Changed for Boards in 2021?
Ready to empower your credit union board of directors? Contact Onboard or request a free trial today.
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