Credit Union Vs. Bank: Which is correct for you?

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Both banks and credit unions offer a number of financial products, including savings accounts and certificates of deposit (CDS). The main difference between the two is that banks are usually for-profit institutions and credit unions are non-profit organizations.

Credit unions may have limited membership in some cases and may require them to live in certain areas or work in certain businesses or other restrictions.

Pros and Cons of Banks

Bank Pros

• Wide access: A brick and mortar bank may have branches and ATMs down the street from where you work or live. Also, the bigger ones may have anywhere you travel around the country. Banks usually have more places than credit unions. For example, the Navy Federation is the world’s largest credit union, with only over 360 branches worldwide. Additionally, Chase, the largest bank in the United States, has over 4,700 branches.
• Various options: While some of the nation’s largest banks, such as Chase and Bank of America, are brick-and-mortar stores, banks are also small, local or regional, and may offer more personalized services. There are also many online banks.
• Possibility of FDIC insurance: Many banks insured by federal deposit insurance companies (FDICs) by a standard $250,000 per depositor and per FDIC insurance bank, per ownership category. According to the FDIC website, FDIC Banks are supported by the full faith and credibility of the US government.

The disadvantages of banks

Pros and cons of credit unions

The advantages of credit unions

• Possibility of a higher rate: Credit unions may have higher deposit yields than banks in some cases.
• delay insurance: Federal insurance credit unions are supported by the US government. The National Credit Union Agency (NCUA) is a government agency that guarantees deposits to member credit unions. Check out NCUA’s Stock Insurance Estimator to see how the insurance rules apply to member stock accounts.
• Personal connections: Credit unions tend to be local or regional, and often serve certain communities. Therefore, services offered by credit unions may be more personalized.
• Shared branch: Some credit unions can share branches and make banks far from their homes.

Cons of credit unions

• Access is restricted: Credit unions are usually local or local and may not serve your area.
• Membership requirements: To become a member of a credit union, you may have to live or work in a particular area.

Are banks safer than credit unions?

Both FDIC Bank and NCUA Credit Union are supported by the full faith and trust of the US government and offer similar protections. Both institutions protect up to $250,000 per depositor, per ownership category, per federal insurance bank or credit union.

Checking accounts, CDs, savings accounts, and money market accounts are examples of accounts covered by federal deposit insurance.

Other factors to consider

Here are a few other things to consider when choosing a bank and credit union.

• Do you offer FDIC or NCUA insurance coverage?
• Are the branches and ATM locations convenient? Will I refund some of my out-of-network ATM fees?
• Can I find an account with no fees or lowest rates?
• Can I get a competitive APY when it comes to savings accounts or CDs?
• Does customer service time work on your schedule?
• Check out Bankrate reviews and research and compare banks.

Conclusion

When shopping for the Right Bank or credit union, always be aware of the fees, minimum balance requirements, and fees offered for your savings product. You may also want to consider accessibility, whether it’s a branch location or through digital means.

Most consumers have maintained their bank accounts at the same institution for over a decade, allowing them to make the decision to be confident. But don’t hesitate to switch to a new bank or credit union, especially if some institutions offer yields far more than others.