Banks vs Credit Unions: What’s the Difference?
bank and a credit union
When it’s time to choose a financial institution, many consumers struggle to choose between a bank and a credit union.
Often, people are unsure of the difference and assume that both options are the same.
However, there are some differences, each offering different advantages.
Before making a choice, it would be good to learn the difference and determine if the bank or credit union is more beneficial for your accounts.
Account Eligibility
Unlike a traditional bank, certain limitations generally exist with credit unions.
Therefore, you may need to live in a specific location or be affiliated with a particular company or organization to apply for a financial account with a credit union.
However, national banks typically offer individual account ownership to anyone over 18 who meets standard requirements, such as age, citizenship, and no outstanding banking debt.
Before applying to a credit union, it would be essential to verify that you meet its field of membership ahead of time to avoid being turned down for an account.
Fees
Individuals tend to check for rates and fees first to avoid higher costs and other expensive regulations when selecting any financial account.
Generally, credit unions offer more attractive offers, such as low rates for loans and reduced monthly account fees.
Some institutions even offer discounts and deals based on the account type, the amount of money kept in the account, and other current promotions.
Security of Funds
Knowing the safety of your money should be at the top of your list before applying for any financial institution.
The good news is that both banks and credit unions are generally safe when holding funds for account holders.
Regardless of the institution you choose, it would be crucial to ask about the security of your funds before selecting an account.
This includes the number of funds guaranteed to be insured and replaceable in incidents like the bank or credit union going under or out of business permanently.
Ownership
The credit union members are its owners; however, banks are owned by shareholders.
As a result, bank rates are typically higher for customers to meet the demands of shareholders.
In addition to monthly maintenance fees, the ownership differences could also cause banks to charge higher interest rates for loans, while credit unions work hard to keep membership affordable.
Outsiders most likely make decisions for banks, but credit union members typically have a say in changes or standard choices on how the institution is run.
When it’s time to store your money in a financial institution, there are many companies to choose from, whether you select a bank or credit union.
The choice is ultimately up to your preferences, financial plans, budget, eligibility, and more.
Category: Banking
