Banks vs. Credit Unions: What’s the Difference?

By: Vincent Mortensen

Some consumers are confused when it comes to banks and credit unions.  There are even some that believe they are the same institution under a different name like Target is different from Walmart.  Both are super stores, but different companies.  This is not the case.

Below is a chart that explains the basic differences between banks and credit unions. 

  Credit Union Bank
Structure Non-profit Institution For-profit Institution
Insurance Up to $250,000 by the NCUA Up to $250,000 by the FDIC

Leadership

 

Volunteer Board of Directors elected by members of the credit union. Paid Board of Directors voted in by stockholders that may or may not be customers of that bank.
Earnings Net income is used to lower interest on loans and higher interest on savings. Stock holders may receive a share of the profits through dividends.
Products Full range of financial products and services. Full range of financial products and services.
Service Delivery Branches, online, ATMs, mobile Branches, online, ATMs, mobile
Fees Low to no fees Fees usually apply

Currently, I keep my money in a credit union and I like it very much.  The loan rates are lower and savings accounts make a little higher interest than commercial banks.  I have also been with a bank in the past and enjoyed their services as well.  Whatever you decide to choose, you now have a better understanding on what your financial institution is all about.  Good luck!

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