When it comes to saving your money, you’ve got options. Investments, banks, credit unions, mattresses, taped to your thigh… so many places to put your money. How do you decide? Something many people still don’t know is the difference between banks and credit unions. Let’s get into that, and put the tape away.
Members vs. Customers: Banks are for-profit institutions that have owners/shareholders. They have customers from whom they need to make a profit. Credit unions are not-for-profit institutions, and their customers are actually considered members. This usually means more favorable rates and lower/less fees for members of credit unions. They want to do what’s best for their members, because they’re also the owners.
Location, location, location: Some of the larger national banks will have multiple branch locations and ATMs in your area (even across the country). This convenience is one advantage over credit unions. For example, you can avoid fees from using out-of-network ATMs. Credit unions are typically local institutions with few branches and ATMs, which is fine if you don’t leave town very often. A bank will offer more convenience of you travel or move. However, some credit unions and banks belong to a network like SUM, allowing members to use more ATMs without fees.
Products: Banks will typically offer more robust services and products than a credit union. More types of savings and checking accounts, as well as loans.
Services: Banks typically offer a wider variety of services and account options to go along with their products. Also, online banking and bill-paying have become standard in the large banks, but less standard in the smaller credit unions.
Customer Service: This can be based on opinion and circumstance, but some might say that a credit union will offer more personal service to its members than a bank will to its customers. A credit union will also have far less people to serve. However, banks are more likely to offer 24-hour customer service.
Products: While a bank will offer more variations, they essentially offer similar products as a credit union (savings, checking, and loans). So, when shopping for a place to put your money, just do some research and find what works best for you. Just because a bank has more options doesn’t necessarily mean they have the one that’s best for you.
Security:Both banks and Credit unions are federally insured. Banks by the FDIC, and credit unions buy the NCUA.
So which is right for you? Why?
Clearly banks have more account options, more convenience, and more readily available customer service (although not decidedly better). Credit unions typically offer more favorable rates for typical accounts and loans, and less fees. The decision just depends on what is important to you. Ask yourself the following questions…
- Do I need the convenience of ATMs and branches wherever I go?
- Am I going to move any time soon?
- Am I willing to pay fees for the convenience of a big bank?
- Do I need online banking capabilities?
- Am I going to apply for a loan any time soon?
Now research the following questions about your potential institutions…
- What are their rates on savings/checking accounts?
- What is the interest rate on a loan? (if shopping for a loan)
- What fees do they charge for accounts, if any?
- Where are their branch/ATM locations?
Now you’re on your way to making the decision. Any other questions you need answered to make this choice?