In the search for the best place to put your money, the question of bank or credit union arises. Which one is best for you? What services, such as free ATMs or apps, are worthwhile and which are luxuries? How much does it really cost? Should you go local or with a nationally recognized brand?
Let’s start with the pros and cons between using a bank and using a credit union. Both financial institutions offer many of the same services, such as checking and savings accounts, and personal loans. Banks, however, are for-profit organizations, while credit unions are nonprofit. Banks tend to be quicker when it comes to offering new technology and tools to their members, but customer service is usually better with credit unions over larger banks. Credit unions also offer higher interest rates on deposits and have lower fees on loans than banks. Both banks and credit unions insure your funds up to $250,000.
When it comes to accessibility, large national banks have branches across the country, while smaller banks cover smaller regions. Credit unions usually have fewer branches than banks, but some credit unions participate in a shared branching network, which allows you to transact business at the physical location of a network partner.
The biggest difference between banks and credit unions is at the core of why each exist. Banks are for-profit institutions, whereas credit unions are nonprofit institutions. Since banks exist chiefly to make a profit, their operations revolve around maximizing that profit. Credit unions exist to serve a certain, specific community of people related by factors which may be based on geographical location, employer, membership in another association (such as military), faith, or other factors. Credit unions offer various financial products to their members with the most favorable terms possible. Discounted loan rates, reduced fees, and other benefits exclusive to their members are why many people choose a credit union over a bank.
Ultimately, when making the decision of where to put your money, you will need to decide what is important to you and which financial institution offers the services and products you most desire. Since you are not limited to choosing one or the other, you may wish to open accounts at both your local bank and a credit union of your choice. Over time and with continued use, you will discover which best serves your interests and meets your financial needs.