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Banks are for-profit companies owned by shareholders. Credit unions are nonprofit cooperatives owned by their members, the people who deposit money there. The structural difference shows up in fees and rates.
Where credit unions usually win
- Lower fees on overdrafts, ATMs, and account maintenance
- Better savings rates on average (though the best online banks still beat them)
- Lower interest rates on loans, especially auto loans
- More personal customer service
Where banks usually win
- Bigger branch networks if you travel a lot
- More sophisticated mobile apps and online tools
- Wider ATM networks
- Faster product innovation
Insurance: the same protection
Federally-insured credit unions are covered by NCUA insurance up to $250,000 per account ownership category, the same coverage as FDIC at a bank. Different agency, identical protection.
What this lesson is NOT
This lays out where credit unions tend to win and where banks do. It is not a blanket case that credit unions are always better, and the deposit insurance behind each is equivalent, so safety is not the deciding factor.
Test what you learned5 questions · ~2 min
Quick check on this lesson
Answer each question and we’ll show you why the right answer is right, and why the others aren’t.
- 1.
What's the structural difference between a bank and a credit union?
- 2.
Per the lesson, where do credit unions usually have an advantage over banks?
- 3.
Per the lesson, where do BANKS usually have an advantage over credit unions?
- 4.
How does NCUA insurance at a federally-insured credit union compare to FDIC insurance at a bank?
- 5.
Per the tip callout, how hard is it usually to qualify for credit union membership?
0 of 5 answered
Reflection (private to you, stored locally)