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Credit Union vs. Bank: How To Decide

Whether you’re opening new checking accounts or applying for a vehicle loan, you should find the financial institution that best fits your needs. The first thing to do in your search is to determine whether you need a credit union or a bank.

What’s the difference? Banks are businesses that make money off the customers who lend and save with them. Credit unions, on the other hand, are non-profit, meaning they’re more focused on providing services than paying shareholders. Both options offer valuable services, but differ in policy, benefits and structure.


Both credit unions and banks have restrictions on who can open an account, though banks tend to be a little more lenient. As long as you can provide identification and don’t have any outstanding negative balances, you can usually open an account with a bank.

Credit unions, on the other hand, may require potential members to be one of the following:

  • Related to a current member
  • Employed by a certain company or organization
  • Be a resident of the servicing area

Despite these restrictions, it usually isn’t too difficult to join a credit union. Of course, you may wonder why you should put in the effort when you can just enroll with a bank.

The answer is this: When you enroll with a bank, you become a customer, but when you join a credit union, you become a member with a stake. Since credit unions aren’t profit-driven, every member is a part-owner of the enterprise. It’s created by the community it serves, which can make a big difference when it comes to decisions about profits vs. people.

Interest and Fees

One of the most significant differences you’ll see between credit unions and banks is in interests and fees. As a business, it makes sense for banks to offer less interest on a savings account and charge more in fees. Credit unions, on the other hand, tend to offer higher interest rates and charge fewer or lower fees.

Customer Experience

You probably aren’t surprised to learn that, on average, credit unions report higher levels of customer satisfaction than large banks. When you open an account with a credit union, you can be confident that the representative is trying to help you find the right financial product. In contrast, some banks have quotas for employees; as a result, some representatives may feel compelled to push you to open accounts you don’t need or that have higher fees.


While both credit unions and banks offer deposit products, the types tend to differ. Banks generally focus on promoting high-end products such as these:

  • Business accounts
  • Wealth management
  • Investments

These usually require more money to open and generate more revenue for the bank.

Credit unions, on the other hand, are more likely to offer accounts that yield benefits even with modest funding. This includes money markets and savings accounts for kids.


Finally, you may be wondering how secure your funds are with a credit union vs. a bank. Honestly, the two are pretty well matched. Both institutions usually offer EMV cards, which contain a computer chip that plays an important role in keeping your information safe. Additionally, banks and credit unions both have departments that investigate fraudulent transactions.

What about insurance? Since the Great Depression, banks have been insured by the Federal Deposit Insurance Corporation, which now covers up to $250,000 per person per bank. Credit unions are covered for the same amount, though they’re insured by the National Credit Union Administration.

No matter how you look at it, credit unions have more to offer than banks. Interested in finding the best financial credit union? Then you should head over to Del Norte Credit Union. We’re proud to offer our community competitive rates and first-rate member service. For more information or to enroll today, give us a call at (877) 818-3628 or contact us online.