It is important to know the distinctions between a bank and a credit union when deciding which financial institution you want to be a member of. Although both financial institutions do similar things, each offer different pros for their members. The biggest difference between a bank and a credit union is that a bank is a for-profit institution and a credit union is a non-for-profit institution. You may be thinking, what does this mean? For banks, this means that they are in the business of maximizing profit and issuing dividends to their stockholders, not their customers. Since a credit union is a non-for-profit institution, they put their profits back into their members through lower fees, better rates, added locations, equipment, more ATMs, etc.
Now, let’s talk about the pros of Credit Unions. Credit Unions are local and community based while banks are national or regional based. This is important to consider because credit unions offer more personalized customer service than banks and allow members to have a common bond through their place of employment and where they live. Credit union’s primary purpose is meeting their member’s needs. Credit unions are not focused on making a profit as much as banks are, so they are able to offer their members lower fees, better interest rates on loans and higher yields on savings. Deciding whether you would rather be a member of a credit union versus a bank is all based on your personal preferences. If you are looking for a financial institution with better rates, lower fees, and a more personal connection then a credit union is the way to go.