Credit union and bank are two different types of financial institution which provide similar banking services such as checking accounts, savings accounts, and loans. Since similar services are provided in these two financial institutions, people may feel struggled to decide which one they should choose. In fact, there are several aspects that people need to consider in order to find the right one that meet their financial needs by looking at the differences between credit union and bank.
One of the core differences of bank and credit union is the profit structure. Banks are run by shareholders. Therefore, banks are mainly operated for profits and set the goal to maximize benefits for their shareholders. Credit Unions, on the other hand, are not-for-profit institutions which owned and operated by their members. As a result, the goal for credit unions is to maximize benefits for their members.
Unlike banks which are open to the general public, credit unions only open for their members. People need check their eligibilities before joining into a credit union. Normally, people who work in the same company or belong to the same community are served by their own credit union. Banks usually have branches located anywhere in the country and even abroad. Credit unions, however, might not be able to cover such wide range. Therefore, people who value convenience and accessibility are more likely to choose banks rather than credit unions.
-Fees and Interest rates
Banks usually charge high service fees in order to make profits. However, for credit unions which are being not-for-profit institutions, they charge low account fees and transaction fees. Also, credit unions are able to exempt themselves from paying taxes that banks need to pay which allows them to offer high interest rate savings account for their members.