Are you trying to decide between using a credit union or a bank?
Deciding who to trust with your money isn’t always an easy decision, and there are many different factors you need to consider to get the best experience.
As you research your options, you might be wondering what the difference is between a bank and a credit union and which one will help you reach your financial goals. Here are seven things you need to consider as you’re weighing credit unions vs banks:
1. Understand Ownership
One of the key differences between banks and credit unions is who owns them. Banks are for-profit institutions that investors own. Credit unions are not-for-profit, and members own them.
This is important to consumers because, while banks need to profit every year for their investors, credit unions do not. This typically means you’ll save money on fees and see lower interest rates when you join a credit union.
2. See If You’re Eligible
Because you have to join a credit union, some of them limit their membership. For example, you may have a credit union that only serves a particular company, industry, or local area. Anyone can open an account at a bank at any time.
3. Decide What Products and Services You Need
Since credit unions are often smaller than banks, they typically offer fewer services, especially commercial banking. For example, if you’re looking to take out a business checking account, you may want to consider a bank rather than a credit union.
4. Check Insurance and Protections
Both banks and credit unions are qualified to protect your money. All banks in the U.S. must be insured by the Federal Deposit Insurance Corp (FDIC), while the National Credit Union Administration (NCUA) backs credit unions. Before you apply for an account with any bank or credit union, check with these organizations to make sure they are legitimate.
5. Test the Customer Service
Before choosing a bank or credit union, call them, and ask questions to understand how they provide customer service. A locally owned and operated credit union may provide better customer service than a large national bank chain, however, this will vary.
Since credit unions are owned by their members, they want to ensure their members are satisfied and have a bigger incentive to provide quality service.
6. Look Up the Number of Locations
Again, since banks are typically larger institutions, they will likely have more locations to serve you. A local credit union may only have one or two locations in your area, which could be an issue if you’re traveling and need assistance.
7. Consider Online Banking and Technology
If you love pulling out your phone and accessing your account information in a matter of seconds, you must ask about what technology your potential bank or credit union can offer. National banks often have more resources and money to develop user-friendly technology tools, but a credit union may have everything you need.
Get More Information on Credit Unions vs Banks
Deciding on the credit unions vs banks debate isn’t always easy, and sometimes people will use both to best suit their needs. Check out the rest of our website for more helpful information as well as more personal finance tips.