Credit Union vs. Bank: What’s Your Financial Choice?

Managing your finances wisely is a smart move for today and the future, so it’s completely okay if figuring out whether to go with a credit union vs banks feels like a big deal. It’s a decision that can shape the way you handle your funds and eventually influence your financial life.

This article will discuss the key differences, advantages, and considerations associated with credit unions and banks to help you decide according to your financial needs and goals.

 

Credit Union vs Bank: Ownership Structure

Credit unions are not-for-profit organizations. We don’t exist to make money for external investors and are exempt from federal taxes. We operate as cooperatives, with the people who use our services (members) owning and running the operation.

When a credit union makes a profit, it does not pad the pockets of distant shareholders. Those earnings either go back into improving the credit union itself or are given back to the members through better services or more favorable interest rates.

Banks, on the other hand, are in it for profit. They are for-profit entities owned by shareholders who invest in the bank with the expectation of making money in return and therefore subject to paying federal income taxes.

Unlike credit unions, their primary goal is to make money. Profits earned are often distributed to shareholders in the form of dividends.

When it comes to decision-making in a bank, there’s limited member involvement or a more hands-off approach for the regular customers. Shareholders might have some influence, but day-to-day operations are generally not influenced by the average account holder.

 

Membership Requirements: Community vs. General Public

Joining a credit union usually involves meeting certain conditions. These conditions can be related to where you live, your job, or any affiliations you might have with specific organizations.

We also aim to create a close-knit community of members who share common interests or ties. This could mean people from the same neighborhood, those in similar professions, or members of the same organizations.

Banks are typically open to anyone from the general public. There are usually no specific eligibility criteria to meet depending on the branch. The general public can open any deposit or credit account with a commercial bank, regardless of occupation, location, or affiliations.

 

 

Personalized Service

As a federally chartered credit union, Greater Alliance puts a big emphasis on making our members happy. Credit Unions provide services that are customized to each individual’s needs to ensure members feel well taken care of.

Credit unions go the extra mile by offering financial education and counseling. The goal is to empower members with knowledge so they can make well-informed decisions about their finances.

While most banks have a more standardized, one-size-fits-all approach, other banks do provide personalized services. However, that is often reserved for their more affluent, high-net-worth customers – sometimes requiring 6-7 figure balances.

 

NCUA vs FDIC

Are credit unions FDIC insured?

No, credit unions are not FDIC insured. Instead, they are insured by the National Credit Union Administration (NCUA), which provides similar protection for deposits up to a certain limit per account holder.

What is the NCUA?

It’s an independent federal agency in the United States that regulates and insures federal credit unions. It operates similarly to the Federal Deposit Insurance Corporation (FDIC) for banks and its role is to protect the deposits of credit union members and ensure the stability of the credit union industry. For more information about the NCUA, please visit ncua.gov

NCUA Coverage

Credit unions, like the Greater Alliance, are insured up to $250,000 NCUA coverage per account ownership category. This means that even if something were to happen to the credit union, like financial difficulties, your deposits, up $250,000, are protected.

FDIC Coverage

Banks are regulated by various federal agencies. These include entities like the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the FDIC. Bank customers are insured with the same $250,000 coverage like the NCUA does for credit union depositors.

 

 

Credit Union vs. Bank: Factors to Consider

Interest Rates and Savings

Credit unions generally offer a more favorable deal with higher savings rates and lower interest rates on loans compared to banks. According to a 2022 NCUA report, credit unions had an average interest rate of 11.32% on credit cards, while banks typically had a higher average rate of 12.35%. At Greater Alliance, we have personal unsecured loans with a significantly lower interest rates than any credit cards out there. It is one of our more popular products that our members come to us for.

The same report showed that credit unions generally offer higher interest rates on savings products when compared to banks.

Technology and Tools

Banks are typically known for having more advanced technology regarding online and mobile banking, this is due to banks being much larger than credit unions thus having bigger budgets – but credit unions are catching up. At Greater Alliance we strive to make accessing your accounts easy through technology. We obsess with our processes and ensure it is as easy and convenient for our members. But don’t take our word for it, give us a try.

ATMs and Branches

Banks usually have a wider network of branches and ATMs, especially the major banks. If accessibility is a top priority, especially if you travel often, you may think a bank might be more convenient. However, at Greater Alliance we have a network of 85,000 partner ATMs that can be used with no fees.

 

Credit Union vs Bank: Your Decision Matters

When you’re choosing where to open your account, take a moment to connect with what truly matters to you.

Is it community ownership, personalized service, or advanced technology?

Do you prioritize favorable interest rates or the convenience of extensive ATM networks?

Once you know your priorities, research your options — look into specific credit unions and banks around your area. Evaluate the criteria that matter most to you, whether it’s fees, customer service, or other factors. Once you’ve done your homework, apply for an account with the institution that aligns best with your needs.

 

Bottomline

Credit union vs bank? What’s your choice?

Both offer essential financial services, but the distinctions lie in their structures, services, and mission.

As a federally chartered credit union, Greater Alliance Federal Credit Union prioritizes member-centric approaches, community focus, and financial education. Join us today and experience the credit union difference first hand!