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Difference between credit unions and banks

2 minutes minutes read

Opening an account at a financial institution is a good idea to build your credit, but how should you decide between a bank and a credit union?

Banks

The first thing to know is that banks are a for-profit type of institution. Anyone is eligible to apply for a product in a bank, but as customers, you don’t have a say in a bank’s decision. Banks usually offer lower yields and higher interest rates for customers, but they offer a large variety of products too. They also have a large amount of ATMs across the country and a technology advantage, allowing customers to easily access their information and interact with their money with no major issue.

Credit Unions

Credit unions are a non-profit organization. This means that users of credit unions are members and they “own” the institution. Opposite to banks, credit unions offer lower fees and interest rates and higher yields for the members of the union according to Investopedia. On the other hand, the product variety and accessibility are limited. Finally, technology is a big disadvantage, sometimes even lacking mobile banking.

In conclusion

Both options are great, but your decision entirely depends on which one fits your needs best. When you are looking to open an account, always take a look at both types of institutions to make your best choice.

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Arturo Mendez

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