Credit Unions vs. Banks – Which is Best for You?

by Scott Sery on September 2, 2013

Most people know that storing up money in their mattress, or in a suitcase buried in the back yard, is not a good idea.  But with all the different savings institutions out there, the choices can end up being overwhelming.  The final decision ultimately boils down to credit unions vs banks.  Both will provide essentially the same services, and there are benefits to both.  There are some key differences that will cause some customers to be better served by one over the other.

Credit Unions

Have you ever wondered, “What is a credit union”?  They are essential co-ops for money founded on the idea that like-minded people would want to associate with each other like-minded people in their financial lives as well.  Hence places like the teacher’s credit union, or the firefighter’s credit union started.  Credit unions are still considered members only, but the institutions have evolved and now they will let most people in rather than be exclusive to one group.

Credit unions are non-profit companies.   Since they have no shareholders, the members of the credit union are the owners.  The company is not looking to increase its bottom line as much as it is looking to make the members happy.   In order to do so they often will offer a more personalized service to the saver, and they can often offer savings accounts that have a higher interest rate than found at banks.  The National Credit Union Share Insurance Fund (NCUSIF) protects those with accounts at one of these institutions in the event that the credit union becomes insolvent.  While this is not government insurance (although it is backed by the full faith of the US government), it is considered to be more financial fit than its FDIC counterpart.  The downsides to these places of savings are that they have a smaller network, usually provide fewer services than banks, and have limited access (especially online access).


Banks are for-profit companies that are owned by their shareholders.  As such their primary goal is to increase the stock and make the company worth more.  This does not mean they do not care about their customers; they still need them in order to turn a profit.  However, the ulterior motive is not in the customers’ best interest.  Banks will usually offer more services than credit unions, and since they have the financial fortitude, most have perfected their online banking options.  The bank’s network is usually larger, giving easier access to their customers regardless of location.  Deposits to banks are backed by the Federal Deposit Insurance Corporation (FDIC).  The biggest problems with banks is there is often less personal service, since they have corporate policies they are often harder to deal with, and they generally have higher fees.

A bank is not better than a credit union, nor is a credit union better than a bank.  They both provide similar services, and offer similar products.  The choice boils down to what your needs are.  Those who want the personal attention credit unions offer, and do not mind the lack of services, they might be best served by going that direction.  Those who desire ease of access, have complicated financial needs, and do not mind dealing with a larger corporation, then they should go that direction.  The best thing the consumer can do is to shop around, find an institution he or she likes, and go for it.

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Scott Sery

Scott Sery is a native to Billings, Montana. Within an hour in nearly any direction he can be found fishing, hunting, backpacking, caving, and rock or ice climbing. With an extensive knowledge of the finance and insurance world, Scott loves to write personal finance articles. When not talking money, he enjoys passing on his knowledge of the back country, or how to live sustainably. You can learn more about Scott on his website

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