When you decide to open a checking account, you may look through financial institutions in your community to find what is right for you. Do you need a bank or a credit union? Your choice of a bank or credit union can depend on what services you need or what type of banking experience you want.
What Are Credit Unions and Banks?
At the most fundamental level, a credit union is a not-for-profit financial cooperative that operates within a local community or regional area. A credit union’s earnings are paid back to the credit union members with lower rates on loans and higher rates on savings accounts, etc. Credit unions focus on personal loans and small business loans.
A bank is a financial corporation that runs for profit, and a bank’s earnings are paid to stockholders as opposed to account holders. Many banks are set up as a chain operation with branches all over the country and around the world. Banks can offer larger commercial loans for national companies.
Credit Union vs Bank: Membership
Someone who opens an account with a credit union becomes a credit union member, and that membership grants the account holder the ability to vote for board members or run to be on the board as well.
Banks are owned by investors and stockholders, so account holders do not have their voices heard in the same way as they do at a credit union. Banks are not member-focused, which means loyal account holders still see loans with high interest rates and fees so the bank can turn a profit.
Credit Union vs Bank: Financial Aspects
Credit unions are nonprofit cooperatives, and they are not driven to make a profit. Since credit unions are not driven by profit, they are able to offer some financial benefits that a bank would not able to offer.
When you open a checking account at a credit union, you may find you don’t have many fees including overdraft fees. Credit unions are able to offer lower interest rates on loans and credit cards or lines of credit. Credit unions can offer higher rates of return on checking accounts as well!
Because credit unions do not operate for profit, different credit unions can share resources and make having a credit union account more convenient. When you open an account at Great Basin Federal Credit Union, we have partnerships with other credit unions across the country.
Credit Union vs Bank: Protecting Your Money
You want to know what happens to your money after you deposit it. Bank accounts are insured by a government agency called the Federal Deposit Insurance Corporation. Are credit union accounts insured like bank accounts? Yes, they are! Credit union accounts are insured by the National Credit Union Administration. Whether you open an account at a credit union or a bank, your money is protected by federally insured.
The Bottom Line
Ultimately, the decision between opening an account at a bank or a credit union is solely yours. Other factors to take into consideration are ease of mobile banking, which varies depending on each credit union. At Great Basin Federal Credit Union, our mobile banking app GBMobile can take good care of your mobile banking needs.
Stop by a Great Basin Federal Credit Union branch today to learn more!Share: