Although both credit unions and banks are financial institutions, they differ in many ways. The following table compares some pro’s and con’s of each:
| Credit Unions | Banks |
|---|---|
|
Not-for-profit, member-owned financial cooperative (members own the credit union) |
For-profit institution, owned by a few stockholders |
|
Excess earnings, after reserve requirements are met, are applied to lower interest rates on loans, higher interest on savings, or development of new products and services that members have requested |
Profits are paid to stockholders |
|
Self-governed: Each member has one vote in the election of the board of directors regardless of how much money the individual has deposited in the credit union |
Only stockholders vote for the board of directors, based upon the amount of stock owned |
|
Volunteer Board of Directors who are members of the credit union and users of the credit union services |
Paid Board of Directors who may not be from the community and they may not even use the bank's services |
|
Lower auto interest rates, low cost services and no high fees |
Monthly fees & finance charges |
|
The National Credit Union Association (NCUA), is the government entity that insures credit unions. |
The FDIC is the government organization that insures banks. |
|
Credit unions work with other credit unions and share resources to bring convenience and savings to members. CU Service Centers and the CO-OP ATM Network are just two examples of this cooperation between credit unions. |
Competition between banks prohibits a sharing of resources. |
One of the biggest differences is the non-profit status offered to credit unions. This means that most of them do not have the funds available for major marketing and advertising campaigns, so it's difficult for the public to get the information needed to make an informed choice between banks and credit unions. It may require some research, but it is worth the potential savings and service to look into the credit unions serving your area!
