Credit unions are different than banks in several ways. First, they tend to place a higher priority on members’ needs and goals. Typically, they offer lower fees, and some even offer free checking accounts. There is no minimum balance to open a checking account, which is a huge benefit for people counting every penny. Secondly, credit unions tend to offer higher interest rates on savings accounts than banks. That extra half percent can add up over the years.
Another major difference between banks and credit unions is ownership. While most banks are for-profit companies, credit unions are owned by their members and are therefore nonprofit institutions. Members have voting rights, and can elect directors of their choice. They are also supported by the Credit Union National Association, which represents them and promotes their mission. This makes credit unions more democratic. You can vote for the board members you want to represent your needs.
Besides higher interest rates, credit unions tend to have fewer physical locations. That means you may not have as many options if you live in a smaller city. Most credit unions have mobile banking options, but they cannot compete with bank apps. Additionally, joining a credit union tends to be more difficult. Banks often have lower fees and higher sign-up bonuses. In addition, you may not be eligible for a bank’s reward program.