Bank vs. Credit Union – Pros and Cons

If you want to open an account or secure a loan, you will have to decide between going with a bank or a credit union. Many people don’t even think about the choice, they just go with what they’re used to or what they saw their parents using. It is, however, worth weighing the options before you choose your type of financial institution. It is important to know the fundamental differences between a bank and a credit union. Banks are large, private corporations, and you are simply a customer to them with no real power or say in the business. Credit unions are smaller, public nonprofits, and as a member you would be a partial owner of the establishment. Here is a quick guide to banks versus credit unions.

More Services and Products

Because banks are so large and because they are operating for profit, they offer a much larger range of products and services to their customers. Almost any type of financial need you have, from a checking account to savings to loans to IRA’s and much more, you will be able to do all in one place with a bank. There are a lot more options to choose from when deciding on the right financial plan and benefits for your personal needs.

More Accessibility

Banks also offer much more accessibility to your money. They may have ATM’s available for you, and even all over the country. It is much easier to gain access to your money when you’re on the go, especially when traveling. In addition, they can often afford to have a large staff available to help you at anytime, including customer service you can call 24/7. This is essential for people who need a bank that works well with their rigid or unusual schedule.

Less Personalization

Since banks are corporations, customers often feel like they are “just another account number” and less like they are getting personalized assistance. If you aren’t concerned that your banker cares about you or knows your first name, then the general nature of the bank won’t bother you. But banks handle so many customers, it is hard for them to advocate for you as much as you’d like them to.

Worse Rates

Banks offer higher interest rates for loans and lower interest rates for savings accounts than credit unions. This alone makes many people prefer a credit union to a bank.

Better Rates

Credit unions offer more competitive and appealing interest rates. From lower rates on loans to higher rates on savings accounts, credit unions usually win in this category compared to banks.

More Personalization

Because credit unions are often smaller and local to you, they will often help you feel more like a valued member. Credit unions often offer more quality customer service because the members are part-owners in the company. Pleasing you and meeting your needs is a high priority to most credit unions.

Fewer Options

The smaller size of a credit union often means they cannot offer as many products and services for your financial needs. Because of this, you may need to have accounts in multiple places, and that means more work for you. Many credit unions are beginning to offer more checking options and other services, but banks still have more available to you in one place.

Less Accessibility

Credit unions often do not offer their own ATM’s, and do not have the ability to staff 24-hour customer service lines. It can be harder to get your money at any time that you need it, such as in the case of an emergency. Less access to your money at any time is one downside to a credit union versus a bank.

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