What's the Difference Between a Credit Union and a Bank?
While both are institutions designed to help with your financial needs, the two actually have a few very notable differences.
Banks are owned by stockholders, while credit unions are owned by stakeholders, aka, you! In other words, banks are public organizations, while credit unions are not-for-profits. The credit union motto is “People Helping People”, and it’s no wonder because credit union members quite literally borrow money from one another.
Most credit unions require that you live, work, worship, or go to school in a certain area of the credit union. Some credit unions require that you live in a certain area and that you work a certain type of job in order to qualify for membership. Anybody can be a customer of a bank.
The private ownership of credit unions is also why Savings Accounts are known as Share Accounts at credit unions. When members take out loans at credit unions, they borrow money from other members. This also explains why members of credit unions, well, are called members. If you have an account at a bank, you’re known as a customer, not a member, because the money borrowed from loans does not come from others that are part (members) of the organization. Banks are therefore funded by investors, just like other public businesses.
Source: CUInsight
Credit unions are known for their community feel and friendly service. They are also known for their lower rates on loans. Credit unions are a great option when considering taking out an auto loan, mortgage loan, or even if you want to refinance. Expect lower and fewer fees when you join a credit union.
While banks are known for better convenience, like having more available ATMs, you’re likely to pay more interest on loans you take from a bank. Credit unions are known to not be as up-to-date as banks, however, credit unions every day are implementing CO-OP Financial Services (ATMs you can easily access with no fees even if you are not a member of that specific credit union), updated Mobile Apps, and more.
At Fox Federal Credit Union, we are a community-based credit union that offers checking and savings accounts, real estate, vehicle loans, as well as lines of credit to our members. Visit our “Join” page to become a member today!
Remember to consider what you want your financial institution to do for you, and remember to trust the organization that you choose!