How To Decide Between A Bank Or A Credit Union

If you are looking to open a new checking or savings account or maybe even secure a small loan you are probably shopping around at all of the banks in your area.  You may not have ever heard of Credit Union’s before or have even give it much thought.  Well today I am going to walk you through the key differences between the two and why I ended up choosing a credit union for my daily banking.

On a very basic level banks and credit unions essentially offer the same services.  You can deposit money into a savings or checking account, open a business account, secure loans, and use ATM’s.  The difference lies in how they operate and how they are run.

Banks Explained

As you probably know banks are for profit institutions. They exist to make money not for their clients but for their themselves and their shareholders.  As a result you may experience things such as higher fees and lower interest rates on savings accounts.  Most commonly people say that going with a larger bank can feel like a very impersonal and sometimes robotic experience.

On the flip side, it’s really nice to have access to ATMs across the country and more branches in more places. And very important to most millennials, most banks are investing heavily in technology to make their online banking and other services more convenient.

Credit Unions Explained

A Credit Union is actually a non-profit institution.  It is technically member owned although there usually are some executives to run the day to day operation.  As a result, lower fees and higher interest rates on savings accounts are used to get customers in the door.  Credit unions usually cater to a smaller more exclusive customer base but there are quite a few that have massive membership numbers.  For example, lots of large corporations have credit unions for their employees and the credit union I use requires your address to be within a certain distance of the nearest branch.  Although, I am sure you will find a credit union to fit your needs.

Aside from the lower fees and higher interest rates on savings accounts credit unions are known for the high quality customer service they provide. Most people who use them say the bankers they interact with really go out of their way to understand your financial needs and help you plan to achieve your goals. This all ties back to the customer owned non-profit status that they hold.

The big downside is the lack of branches and ATMs. Since most Credit Unions serve specific areas or companies they are regionally located and don’t have a national network of branches. However, even though your individual ATM network is usually limited, your credit union may give you access to the CO-OP network which boasts over 30,000 ATMs.


It really comes down to what you are looking for in a financial institution.  If you are looking for a convenient place to deposit and withdraw money I would say the bank is the superior option, as they are more nationally present and have quick automated processes in place.  If you want to save a little more and the customer service experience is important to you go with the credit union.  These institutions come in all shapes in sizes so my best advice is to shop around.  You might be surprised with what you find.  For example, a small bank might be personable like a credit union with a larger presence and a large credit union might be able to give you lower fees and high interest savings with many of the benefits of banks.

My Experience

I ended up going with my local credit union and here’s why.  Their checking account yields 2% interest on balances up to $10,000 and all I have to do is have at least 1 direct deposit a month and swipe my debit card 12 times a month.  I get direct deposit through work and the 2% interest will pay for my months worth of coffee and then some.  Additionally, they offered me a credit card specifically for those who are new to credit and looking to build up their credit score.  Additionally, my credit union does participate in a CO-OP network and will even give me a refund of up to $20 worth of out of network ATM fees.  It was a perfect setup for my specific situation.

The bottom line is keep an open mind, shop around, and ask questions.  Everyone’s situation is different and could be better suited to a variety of different options. If you need help deciding feel free to reach out to us and we can walk you. Through more detailed differences.

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