Banks vs Credit Unions: Why You Should Choose A Credit Union Over A Bank

Most everyone knows what a bank is, what a bank does and has seen many banks before. A bank, as officially defined by the Business Dictionary, is an establishment authorized by a government to accept deposits, pay interest, and provide other financial services to its customers, among other services. Credit unions offer similar financial services as banks do, but differ in their structure. The World Council of Credit Unions defines credit unions as member-owned, not-for-profit financial cooperatives that offer savings, credit and other financial services to its members. Today, anyone can join a credit union and each credit union has a “field of membership.” Such fields of membership include members who are from a particular region or community, family, school, labor union, homeowners’ association, church, workplace or organization. Some credit unions may have additional fields, but these are typically the most common fields of membership.

So Why Join A Credit Union?

While banks and large financial institutions provide services for its customers, credit unions are typically local, member-owned organizations dedicated to providing its members with affordable financial services without any hassles. Organizational decisions are not determined by a hired board or a group of stockholders, and instead the governing board has elected volunteer members.

Credit unions still offer many of the similar financial services that banks offer, but on average credit unions will be able to offer lower interest rates on loans and higher interest rates on savings accounts. Much like banks and other large financial institutions, credit unions can still offer various loans to its members, such as automobile loans (new and used), primary mortgages, home equity loans, home equity line of credit (HELOCs), personal loans and even savings or certificate of deposit secure loans.

Also, much like a bank, credit unions offer savings accounts, checking accounts, retirement accounts, certificates of deposit and small business accounts. Some credit unions might also offer accounts with “clubs” like a Christmas club account or children’s savings accounts. Another benefit to joining a credit union is that every deposit up to $250,000 will be insured by the National Credit Union Administration, which is much like the Federal Deposit Insurance Corporation because it provides that same protection.

For the more tech-savvy and on-the-go consumers, credit unions also offer mobile banking apps and online banking. They are able to provide a safe way to deposit funds, check account balances and transfer funds via smartphone device or computer easily.

Another benefit to joining a credit union is that they want their members to succeed, not just by saving more money and getting the best interest rates on mortgages, but also by helping members become “financially literate”. This means that credit unions will typically offer sessions on informative financial topics to give better insight to their members.