What's the difference between a credit union and a bank? We're here to clarify.
Credit unions are non-profit organizations whose main goal is to provide service, rather than being profitable. Credit unions are run by its customers and have a board of directors, which is a group of volunteers who are credit unit members. Members of credit unions must have religious, geographical, or occupational common bonds. Although credit unions offer similar products and services as banks, they do not offer all. They choose which services and products to offer depending on the needs of their members.
Advantages of Credit Unions
- Interest rates range from 4 to 10 times higher than local banks.
- Customer service is better. Credit unions focus mainly on providing their customers with low fees, and rates, while catering to all of their needs.
- Loan and credit card rates are much lower than local banks.
Banks are a national, regional, or community for-profit corporation owned by investors. They are regulated by either the federal government or by state regulators. Their main goal is to seek a profit to return to their shareholders. For loans, they receive their funds from the Federal Reserve System. Banks focus more on customer accounts and trust services.
Advantages of Banks
- They off 24-hour customer service and online banking, unlike Credit Unions who have fewer offices and ATMs.
- They offer all the services and products that a credit union may not offer.
- They are 100% insured by the Federal Deposit Insurance Corporation (FDIC).