Credit Union vs Bank: Which One Should You Choose?

Trying to find the best place to keep your hard-earned money?

Wondering what the difference is between banks and credit unions?

While banks and credit unions are similar in many ways, they are not exactly the same thing. Each comes with different benefits and advantages and it can be hard to decide which one is the best to use.

Luckily, we’re here to help. Below we’ll weigh in on the age-old credit union vs bank discussion and tell you exactly what you can expect from each.

Advantages of Credit Unions

Many people who use credit unions look back and wonder how they were able to stay at a bank for so long. Credit unions have a few big things that set them apart from the typical bank and make them a particularly attractive option.

Here’s what you can expect if you become a member of a credit union.

1. Lower Fees

One of the biggest advantages of credit unions is that they usually offer lower fees than banks typically do. To open an account or to keep it month after month, banks will often charge fees in order to earn a profit.

Since credit unions are non-profit, they typically charge much less on all kinds of account fees, or even none at all.

2. Great Customer Service

Another way that credit unions are often better than banks is that they have better customer service. While not always the case, credit unions are usually more approachable and friendly. They’ll be more willing to work with you to meet your specific needs.

Banks will often see you as only your financial numbers including your income, your debt, and so on. Credit unions will see you more as a person and will make decisions for giving you loans or services based on the whole picture of who you are in addition to your financial data.

3. Higher Interest Rates for Accounts

When it comes to savings accounts, CD’s, or other types of accounts, credit unions usually outshine banks.

Credit unions typically offer higher interest rates on accounts and this will allow what you have stored with them to grow at a faster rate than what would be possible with a bank.

4. Lower Loan Interest Rates

When it comes to loans, a credit union will usually have lower interest rates. When it’s time to take out a loan for a big purchase or to get a mortgage, then credit unions will typically be a better option.

On top of this, the lower fees you’ll likely face with credit unions will also help save you money.

Additionally, some credit unions may also use a loan origination system to make getting a loan very easy. You may want to read more to learn about how that works.

Advantages of Banks

So what are the benefits of banks? While there may seem to be a lot of advantages of credit unions, banks still win out in some ways as well.

Here are a few of the main benefits of using a bank instead of a credit union.

1. Higher Number of Services

Since banks are for profit, as opposed to a credit union, the advantage is that they usually offer a fuller range of services and products. While credit unions will be better suited for providing basic banking needs, banks will offer a wider range of possibilities.

If there is any service that you can’t find at your local credit union, then you may have to rely on a bank instead.

2. More Locations

The other advantage that banks have over credit unions is accessibility. While credit unions typically have very few locations, banks usually have multiple locations that are conveniently spread out.

If you choose to use a large bank you’ll usually be able to get access to your funds pretty easily whether you’re in a neighboring state or on the other side of the country.

3. Better Technology Options

Another difference between banks and credit unions is that banks are often more technically savvy. Banks are more likely to have adopted all of the latest technology banking features.

With nearly any bank you choose, you’ll have options for accessing your account information online. You’ll probably be able to make use of mobile banking solutions to deposit or transfer money as well.

Credit unions, unfortunately, are usually a bit more behind the times when it comes to technology. While there are some online credit unions around, many local credit unions haven’t yet reached the level of accessibility that banks have.

4. Easier to Join

When signing up for a bank account, the process is usually very simple. You’ll have to make a minimum deposit and may also have to pay a fee to get started.

Credit unions, on the other hand, have a few different requirements and qualifications that you’ll have to meet in order to make use of their services. You’ll usually have to already be a member of a special group or organization, work in a certain profession, or meet other eligibility requirements.

Making the Choice Between Credit Union vs Bank Services

The credit union vs bank debate doesn’t have an obvious winner. The truth is that it depends on what you’re looking for.

If you only need basic banking features and would like to pay fewer fees then credit unions will probably be the best choice. On the other hand, if you need more fully-featured services and you need easy access to your funds, a bank might work better for you.

Be sure to weigh out the points above carefully if you’re trying to decide between a bank and a credit union.

Trying to get a better grasp on your finances? Then you may want to click here to see our list of free finance calculators now.

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