Credit Union vs. a Bank

Credit unions and banks offer a large number of of the same types of financial products and services But there are a few key differences between the two From ownership structure to membership requirements there are a lot of differences between banks and credit unions that are essential to know before choosing where to put your money You may find a stronger connection to the society with a credit union but you may find more convenience and accessibility with a bank Learn more about credit unions and banks to help determine which one might be a better fit for you See Best High-Yield Savings Accounts Up to APY Credit Union Pros and Cons The pros of credit unions include better interest rates than banks while the cons include fewer branches and ATMs Pros Credit unions tend to offer higher interest rates for savings accounts than banks Credit unions typically charge lower interest rates for loans than banks Fees at credit unions frequently are lower than they are at banks See Best Credit Unions Stacey Black lead financial educator at BECU a credit union with locations primarily in Washington state says credit unions are able return profits to their members in the form of lower interest rates and fees Aside from generally more attractive interest rates and lower fees credit unions provide more personalized customer provision than banks do says Brandon Goldstein a chartered financial consultant at Prudential Financial In line with the customer operation advantage Chuck Fagan president and CEO of Velera a provider of payment services to credit unions says credit unions enjoy tremendous trust from their customers This level of trust and its value sets credit unions apart says Fagan Members trust has been partially built through credit unions history of providing a high level of personal and customized institution Cons Several consumers might be put off by credit unions membership requirements such as working for a certain employer belonging to a specific group or living in a certain area Because they zero in on relatively small organization areas credit unions generally operate fewer branches than banks However credit unions stress that they generally belong to large networks of shared branches Credit unions may offer access to fewer ATMs than banks but credit unions point out that they generally provide access to nationwide ATM networks that are often fee-free In the edition of the American Customer Satisfaction Index the number and location of branches and ATMs were the lowest-rated aspects of credit unions As for the membership requirement it might be one more hurdle for borrowers seeking loans from specific credit unions Credit unions can lend money only to their members credit union organizations and other credit unions Credit unions were originally formed to serve a specified population or group and while greater part have broadened their mandates to serve the general community a multitude of still maintain lending specialties that focus on loans to those groups says Ben Johnston chief operating officer of Kapitus a lender for small and midsize businesses Other than any shortcomings tied to membership branches and ATMs credit unions might trail banks when it comes to instrument like mobile apps While credit unions may not be bleeding edge when it comes to innovation they can and should be on the leading edge says Fagan Bank Pros and Cons Banks generally hold an advantage over credit unions when it comes to branches ATMs and hardware Pros For customers seeking in-person arrangement banks provide access to more branches than credit unions In the American Customer Satisfaction Index banks earn a slightly higher figure for the number and location of ATMs than credit unions The average bank holds far more assets than the average credit union As a development banks wield a monetary edge when it comes to upgrading mechanism In general banks give you more access than credit unions with branches in the hundreds or thousands rather than dozens Banks tend to offer better options for online banking Between national banks creating their own apps and newer online banks specializing in digital finance banks have the edge when it comes to accessibility If you expect to do the greater part of your banking at a physical branch a brick-and-mortar bank might be a better options for you Read Best Online Banks Cons Banks generally are less competitive than credit unions in terms of interest rates for savings accounts Interest rates for loans from banks tend to be higher than interest rates charged by credit unions Banks can offer an impersonal in-person banking experience Historically Americans have held a dim view of banks A Gallup poll ascertained only of Americans expressed a positive opinion about the banking industry essentially the same as the surveyed the previous year In March the same month that two U S banks failed CBS News and YouGov published survey results indicating that just of Americans voiced confidence in U S banks That view has changed lately J D Power exposed in the edition of its Retail Banking Satisfaction Research that bank customer satisfaction had risen sharply That included areas like respondents banks fully supports me in challenging times Read Best Checking Accounts Are Banks or Credit Unions Safer Generally credit unions are viewed as safer than banks although deposits at both types of financial institutions are usually insured at the same dollar amounts The FDIC insures deposits at most of banks and the NCUA insures deposits at greater part credit unions Nine banks have failed in the past three years and all were insured Ten credit unions failed merged or went into conservatorship in and six more in the two years prior Beyond the insurance issue credit unions are considered safer than banks because they tend to take fewer risks and adhere to conservative capital principles In part that s because credit unions are nonprofits whose owners are their members whereas banks are for-profit entities whose owners are investors More from U S News The Average Savings Account Balance Pros and Cons of Online Banking How Much Money Should You Have in Savings Credit Union vs a Bank originally appeared on usnews com Update This story was previously published at an earlier date and has been updated with new information Source