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.
|Structure||Non-profit Institution||For-profit Institution|
|Insurance||Up to $250,000 by the NCUA||Up to $250,000 by the FDIC|
|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!