Bank vs. Credit Union

If you have never been a member of a Credit Union, you may be wondering what it’s all about and how they differ from a bank. There are a number of significant differences that you should be aware of when choosing where to deposit your money. Banks and credit unions are not the same thing and it is important to be savvy about where you can get the most “bang for your buck.”

Banks are owned by investors. This means that a bank is there to make money for its investors and stockholders.  Banks are federally insured by the Federal Deposit Insurance Corporation and a paid Board of Directors makes all business decisions which are generally profit driven.

On the flip side, credit unions are insured by the National Credit Union Administration and are democratically controlled by their members. As a member, you will have some say in how the credit union is run, and hold actual decision-making power. Members elect a Board of Directors versus hiring one, and these directors represent the members in making decisions and upholding policies.

Credit unions are non-profit organizations and therefore those profits gained by the credit union cover overhead costs and then directly benefit the members. Credit unions can therefore offer lower interest rates and low-cost services. The more members in a particular credit union, the higher the benefits to existing members. Credit unions are also tax-exempt.