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Find the nearest branch or ATM. What is the Difference Between Banks and Credit Unions?So, what’s the real difference between a bank and a credit union? Let’s start with ownership. A bank is owned by shareholders. A credit union is owned…by its members! This means a bank must turn higher profits to satisfy the shareholder demand for income. They tend to have higher and more fees, and they also charge more interest on loans as a result. Credit unions, on the other hand, can keep things affordable for their members. It also means big decisions for banks are often made by outsiders, while credit union members have a say in how the institution is run. In a credit union, membership means ownership. And that means more money in your pocket and more focus on serving your financial needs!
Content Source: CUContent Banks and credit unions are the main two financial institutions that hold everyday cash and give you standard banking services, from direct deposit to debit cards. Here’s a quick breakdown of the two as you choose where to have your checking or savings accounts or certificates of deposit. Credit unions vs. banksThe main difference between banks and credit unions is that banks are for-profit enterprises, usually with more robust branch networks and cutting-edge technology, while credit unions are not-for-profit cooperatives owned by their members who benefit from an emphasis on community support and more favorable interest rates. The difference is slightly more complicated when it comes to online-only institutions, as both online banks and online credit unions often have competitive rates and low to no fees. Why choose a credit union?
Why choose a bank?
What to consider when choosing between a bank and credit unionChoosing between the two involves some trade-offs. On average, credit unions tend to offer higher interest rates on deposits and lower rates on loans. Banks often adopt new technology and tools more quickly, especially online banks, which are typically able to offer higher-than-average interest rates. Broad ATM and branch networks are the norm for national banks; credit unions might belong to large, cooperative networks of ATMs, such as Allpoint, and offer shared branches. Banks are for-profit enterprises, while credit unions are not-for-profit. Credit unions in principle exist to serve a community of people tied by a “bond of association,” which may be based on location, employer, faith, membership in another organization or other factors. To serve its community, a credit union provides financial products on the most favorable terms it can afford to offer. However, credit unions sometimes carry membership fees and/or limit their membership to specific communities, so if you're considering one, check whether you qualify and whether there's a fee. What fees does the bank or credit union charge, and how much are they? Ask about monthly maintenance and overdraft fees. Many banks and credit unions offer ways for customers to waive a monthly fee, such as having at least one monthly direct deposit or maintaining a minimum balance, but overdraft fees can get quite expensive, often in the range of $30 to $35, and can sometimes be charged multiple times per day. How many branches and ATMs do they have? If in-person service matters to you, look at banks and credit unions that have local branches. A community bank might be a good choice if that's a priority of yours. If you just need to withdraw or deposit cash on a regular basis, then make sure you have enough ATMs nearby. What interest rates does the bank or credit union offer? Check out the interest rates on whatever accounts you're considering from different banks and credit unions. Summary
Making your choice
What are three major differences between a bank and a credit union?Credit unions and banks offer some similar services but work on a different business model.. What makes a credit union different from a bank?Credit unions operate to promote the well-being of their members. Profits made by credit unions are returned back to members in the form of reduced fees, higher savings rates and lower loan rates.
What is one advantage of a bank over a credit union?Credit unions tend to have lower fees and better interest rates on savings accounts and loans, while banks' mobile apps and online technology tend to be more advanced. Banks often have more branches and ATMs nationwide.
Is it better to go with a bank or credit union?On average, credit unions tend to offer higher interest rates on deposits and lower rates on loans. Banks often adopt new technology and tools more quickly, especially online banks, which are typically able to offer higher-than-average interest rates.
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