With the option of traditional banks, online-only banks and credit unions, consumers have more choices than ever when it comes to where to conduct their financial business. Many factors go into choosing where to keep your money, including convenience, services offered and ensuring your money stays safe and secure. So how do these options compare? Let’s take a look at the differences between banks and credit unions.
For-profit or Nonprofit?
Both traditional and online-only banks are for-profit businesses, while credit unions are run as member-owned nonprofits.
Who do they serve?
Traditional and online-only banks are happy to serve just about any customers. Credit unions, on the other hand, typically require membership eligibility through community groups, schools, employee groups or other organizations.
If consumers are “unbanked” due to past financial mistakes, such as excessive overdrafts, joining a credit union can be a way to start fresh and begin using financial services again.
Which is safer?
The FDIC (Federal Deposit Insurance Corporation) insures up to $250,000 per account holder at both traditional and online banks. The NCUSIF (National Credit Union Share Insurance Fund) insures up to $250,000 per account holder at credit unions.
As long as the bank or credit union you choose is covered by one of these two, your money is equally safe at both types of institutions.
What services do they offer?
Both banks and credit unions offer a wide variety of financial products and services. These can include: checking and savings accounts, personal loans, vehicle loans, home mortgages and credit cards.
If you’re looking for the convenience of multiple branches and advanced online banking services, a traditional bank might be the better choice, as credit unions typically have fewer branches and have been slower to keep up with technological advances, such as app-based banking.
However, if you’re more concerned with personalized, one-on-one service, you will likely enjoy doing business with a credit union. They take pride in offering their members the top-notch customer service experience that can be missing when dealing with big banks.
And if you’re all about convenience and don’t mind minimal service, an online-only bank might be right for you.
Making the choice.
When choosing between a bank and a credit union, you’ll want to consider a number of factors. These can include how often you typically visit a branch or ATM, how much you rely on online services, and whether you value convenience over service (or vice versa).
And remember, you don’t necessarily have to choose one or the other. You can have different accounts at both a bank and a credit union if you choose.
In fact, having your checking and savings accounts at different institutions can actually help you save more. That’s because you won’t be able to automatically transfer funds from savings into checking when you’re running low.
