The Differences Between Credit Unions and Banks
Choosing between a bank or a credit union is an important decision that will allow you to manage your money better. While both institutions offer similar financial products such as checking and savings accounts, loans, and mortgages—there are fundamental differences between the two.
Read on to learn more about the differences between a credit union and a bank to determine which one is right for you.
Commercial and Non-Commercial
One of the primary differences between a bank and a credit union is their structure and ownership. A bank is a for-profit institution typically owned by shareholders or private investors. The primary goal of a bank is to maximize profits for the owners.
Credit unions are cooperative, not-for-profit financial institutions that are member-owned and operated. This structure can lead to a more member-centric approach to offering financial services and products. In contrast, the profit-driven focus of a bank can potentially affect product offerings and customer service.
A credit union is often formed around a shared connection, such as a place of employment, city or state of residence, or an affiliation with another organization like a place of worship. Credit union members can take advantage of lower loan rates, higher savings dividends, and lower fees than bank members.
Insured by the FDIC or the NCUA
Bank deposits are insured for up to $250,000 through the Federal Deposit Insurance Corporation (FDIC). Similarly, money deposited in a credit union account is also guaranteed, but through the National Credit Union Administration (NCUA).
NCUA coverage protects members if the credit union were to shut down or go into conservatorship by providing federal deposit insurance of up to $250,000 per account holder. This insurance coverage ensures the stability and safety of credit unions, protecting members’ deposits from potential losses.
Fees vs. Low or No Fees
Banks often charge higher fees due to their profit-driven nature, while credit unions prioritize members’ needs and offer low or no fees for the same services.
Examples include:
Account maintenance fees—Credit unions typically have low or no monthly maintenance fees for checking and savings accounts, while banks often charge a monthly fee if a certain balance or transaction requirements aren’t met.
Overdraft fees—Banks tend to have higher overdraft fees than credit unions, making them a more expensive option for members who accidentally overdraw their accounts.
Credit unions sometimes offer overdraft protection for ACH, recurring debit card transactions, and checks, in which overdraft payments may be covered up to a set limit.
ATM fees—Banks frequently charge fees for withdrawing money from non-affiliated ATMs. Credit unions often participate in large ATM networks or offer reimbursements for out-of-network ATM fees.
Wire transfers and other financial instruments—Credit unions may provide low to no-cost wire transfers, cashier’s checks, and money orders, whereas banks often charge higher fees for these basic services.
Foreign transaction fees—When you use credit or debit cards abroad, banks often charge higher foreign transaction fees than credit unions.
Early account closure fees—Banks may impose an early account closure fee, while credit unions are less likely to do so.
Loan origination fees—Credit unions often charge lower loan origination fees than banks, making it more affordable for members to borrow money.
Credit unions aim to return profits to their members through better rates and lower fees, making them an attractive option for people looking to minimize banking costs. Furthermore, their member-centric approach fosters a sense of community, ensuring that customers’ financial well-being is at the forefront of the decision-making process.
Community Commitment
Credit unions consistently provide exceptional local service and demonstrate a strong commitment to the communities they serve. For example, Argent Credit Union supports several important local Virginia charities. Members also gain access to unique benefits, such as scholarships and fun perks like tickets to Busch Gardens and Water Country USA.
Being member-owned and operated allows Argent Credit Union to focus on building long-term relationships. As a result, Argent offers more attentive and personalized customer service than larger banks. Our smaller scale and local presence enable us to tailor our services and products to meet the needs of our members better.
Make the Right Choice for Your Financial Future
Now that you understand the key differences between banks and credit unions, it’s time to make an informed decision that best fits your financial needs. Explore the exceptional services, personalized attention, and lowered rates/fees offered by Argent Credit Union.
Click below to learn more about the value and benefits of making Argent Credit Union your financial institution of choice!
