Banks vs. Credit Unions: What Are the Differences?
Saving money is important to all of us, but we don't generally stash piles of cash at home. This leaves many individuals wondering whether they should open a savings account at a financial institution. Not sure about the differences between a bank and a credit union? We've noted the top differentials between both.
What's a Bank?
Banks are for-profit financial institutions with private or public ownership of the overall establishment. As a result, the primary focus is obtaining more accounts to make a profit.
Pros of Banks
Many individuals have savings accounts at banks because withdrawing money is simple, and ATMs exist at most branches throughout the neighborhood. Similarly, some banks have locations throughout the community or country—larger banks often serve a wider range of customers.
Cons of Banks
Some banks have high-interest rates on loans, especially ones required for big-ticket purchases. Likewise, banks often have low dividend rates for account holders, no matter how long you've been a customer.
What's a Credit Union?
Unlike a bank, credit unions are nonprofit organizations that the members technically own. Many credit unions serve a single county or city to ensure their members receive the top-quality service they deserve.
Pros of Credit Unions
Financial credit unions generally have high interest rates on accounts and offer good loan rates to members. Credit unions also have NCUA (National Credit Union Administration) insurance, which protects your money up to a set amount in the event of economic failure. Best of all, most credit unions don't have a monthly service charge for members; the main requirement is opening a savings account.
Cons of Credit Unions
One con of credit unions is that accessing money may be more complex than with a bank. However, this is changing, as some of these financial institutions now offer online banking services. Depending on the field of membership, some credit unions require you to live in the area or work at a specific company in order to be a member.
Which Is Best?
Saying one is best between banks and credit unions is a bit tricky, as the two have key differences. For instance, withdrawing or depositing cash requires a trip to your bank’s ATM. However, credit unions are ideal for long-term accounts due to their high-dividend rates.
Some people open accounts at both financial institutions for a wider range of perks. If this isn't possible for you, we recommend searching for a credit union with online banking services.
Shell Western FCU
Shell Western is a credit union serving the people of Costa County, CA. We offer a range of services to our members, including regular banking accounts, loans, credit cards, and other financial services. Please contact us if you have any questions or would like to become a member.
