Credit Unions Vs. Regular Banks

When looking for a place to do banking, you may be curious what the difference between a standard bank and a credit union is. Chances are that you have many options for both where you live. Finding out the differences between credit unions vs. regular banks will let you know which is best for you and your family.

  1. Ownership

    • Perhaps the biggest difference between a bank and a credit union is ownership. Whereas banks are owned by shareholders, credit unions are owned by its members. Anyone with an account is a part owner of the credit union. While this doesn't mean that you'll have full access to the credit union's assets, you will be seen more as an individual in need of proper services rather than a source of profit.


    • All banks in the United States have to carry Federal Deposit Insurance Corporation insurance. This is insurance that protects your money if a bank goes under, up to a certain amount. Federal credit unions -- those that operate in more than one state and carry a federal charter -- must have FDIC insurance. Local credit unions are not required to have such insurance, but many do. Call your local credit union to see if it has coverage.


    • Private banks are profit-making centers that exist to make money for their shareholders. Conversely, a credit union is a not-for-profit enterprise. This doesn't mean that the credit union doesn't try to make money. It does. However, this money must, by law, be reinvested in the operation rather than being spent outside of it. Fees will be lower and interest rates on your deposits will be higher while mortgage rates will be lower at a credit union than a commercial bank.


    • Credit unions are not only non-profit operations, they are also democratic organizations. In a bank, the more shares a shareholder owns, the more sway she has at the bank. By contrast, in a credit union every individual member has a single vote to determine who is on the board of directors. The CEO of a credit union is elected by the members rather than hired by the board of directors. You may also get to vote on credit union policies, depending on the charter.

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