Personal Finance Advice

If you have ever wondered if there is actually any difference between banks and credit unions, the answer depends largely on which credit unions and banks you want to compare.  Some banks are better than other banks, some credit unions are better than other credit unions, so the potential combinations are endless.Both banks and credit unions have potential pros and cons.  Depending on what you’re looking for, you can find a suitable financial institution whether you choose a bank or a credit union.

Credit Union Pros:

Potentially lower interest rates:  Depending on which credit union you choose, you may be able to find lower interest rates on loans and credit cards than at a bank.

Affiliation benefits:  Since credit unions consider the account holders members instead of customers, they’ll often offer benefits through other affiliated organizations like insurance discounts.

Customer service:  Customer service through credit unions is generally better than with traditional banks, although this varies from institution to institution.

Credit Union Cons:

Closed membership:  Not everyone can join every credit union.  You have to meet eligibility requirements before you can join a credit union.

Limited locations:  The largest credit unions in the United States are affiliated with the military, and other credit unions have limited availability.  This also limits the availability of ATMs.

Bank Pros:

Wide availability:  Some banks have branches in a wide variety of locations, so customers looking for access to their accounts in many different places may find banks more convenient.

Higher interest rates:  Some banks have the backing necessary to offer attractive interest rates for deposit accounts and can also offer a wider variety of financial products over smaller credit unions.

Banks Cons:

Impersonal service:  The larger the bank, the less likely you’ll receive personalized service.  You may encounter situations where you feel as though you’re nothing more than an account number.

No say in the direction of the bank:  While credit unions ask for member input and have votes on major decisions, bank customers don’t have much say in how things are run.

Banks are insured by FDIC and credit unions are insured by CUNA, so deposits are equally safe up to a certain amount.  When you decide whether to use a bank or credit union, take into consideration the location of the institution and the interest rates they offer. Remember that banks and credit unions vary widely, so take the time to look around and find the best option for your financial needs.