The main difference between banks vs credit unions is that banks are institutions made for profit, owned by shareholders with advanced systems and multiple financial product offers. On the other hand, credit unions are non-profit, owned by members and on average more personable due to focusing on the community level in bettering communities and improving financial education. In this article, you’ll learn more on how a credit union is different from a bank.
Why Do Credit Unions Exist?
Before learning the difference between credit union and bank, let’s first understand what is a credit union. A credit union is similar to a bank in many ways since it provides the usual bank services, including investment options and application of loans for a car, mortgage, refinance, credit card, etc.
Depending on the city and brand of Credit Union. On average, credit unions may not have as many physical branches and be product-limited on offers such as commercial banking. So why use a credit union? Despite a few limitations, credit unions are customer and community-centric offers good customer service, insured deposits, and on average reduced loan interest rates across the board.
What is the Difference Between a Bank and a Credit Union?
So, which is better credit union or bank? Depending on your financial goals, it’s tough to decide when asking is a bank or credit union better. Knowing how are credit unions different from banks will help you in your financial decision-making.
You might be wondering, are credit unions better than banks? Just like banks, credit unions offer a wide range of resources on financial literacy. Many seminars are conducted to educate customers on card management and identity theft.
If you’re trying to apply for loan basics i.e. purchase or refinance new or used auto loans, mortgage or even a secured personal loan for home improvement. Compared to credit unions, banks impose strict requirements for eligibility, higher transaction fees, and interest rates. However, banks are more convenient in terms of accessibility and financial options because of more physical locations and multiple financial packages, but Credit Unions do have partnership-shared branching locations around the world.
Credit Union vs. Bank
- What makes a credit union different from a bank?
Both banks and credit unions are both used for opening accounts and applying for loans. The difference boils down to the profit being earned, as a credit union offers reduced loan interest rates and transaction fees while making savings returns higher.
- Which is better: a bank or a credit union?
With the lenient eligibility requirements and budget-friendly services, a credit union is for everyone because most consumers can qualify and maximize their income. If you’re particular on accessibility and technology, a bank will suit you better, but Credit Unions are doing a great job in advancing their online accessibility and technology such as mobile wallet features.
- What are the advantages of a credit union?
If you’d like to have higher savings, lower loan interests, and lower transaction fees, credit unions wins the argument between credit union vs bank.
- Are credit unions as safe as banks?
Yes, credit unions are Federally Insured by the NCUA to at least $250,000. The National Credit Union Administration protects credit unions in the same way the Federal Deposit Insurance Corporation protects banks.