Credit Unions vs. Banks: Which One Is Right for You?

When it comes to banking, Americans are exceptionally loyal. According to a 2021 Bankrate survey, consumers tend to keep their checking and savings accounts open for an average of 17 years.

If you happen to be looking for a new financial institution, however, you may be considering credit unions and banks. This article breaks down the key differences between the two to help you find out which one is right for you.

No matter which you choose, your money is protected at insured credit unions and banks. (Credit unions are insured by the NCUA; banks are insured by the FDIC.) Your money is safe up to $250,000 in the event of a bank collapse.

The key difference between credit unions vs. banks

The key difference between a credit union and a bank is that a credit union is a nonprofit institution that is owned by its members, while a bank is a for-profit institution that is owned by shareholders. This difference affects the rates, fees, services, and products that each institution offers. Generally, credit unions offer higher interest rates on deposits, lower interest rates on loans, and lower fees than banks. However, banks may have more branches and more cutting-edge technology and products compared with credit unions.

The benefits of banking with a credit union

Because a credit union is owned by its members, any profits are returned to members in the form of lower fees and higher interest rates. Here are just a few benefits of joining a credit union:

• Lower fees: Credit unions usually have lower fees than banks because credit unions do not have to pay dividends to shareholders.
• Better interest rates: Credit unions typically offer higher interest rates on savings accounts because they have lower overhead costs than banks. Similarly, they offer lower interest rates on loans.
• Customer service: Credit unions pride themselves on offering better customer service than banks. They tend to be more involved with the communities they serve, as well.
• Special perks: Credit unions often negotiate exclusive deals for their members. These perks might range from discounts on car rentals and purchases, vacations, and entertainment.
• Shared access: Credit unions cooperate, so you can use tens of thousands of credit union ATMs (as well as some branches of other brands) throughout the United States.

The benefits of banking with a bank

While both credit unions and banks offer a range of financial products and services — including checking accounts, savings accounts, loans, credit cards, and online and mobile banking services — a bank may be a better option if:

• You need physical access to your bank brand throughout the United States (or overseas). Only the very largest banks can offer this – regional banks typically have a footprint similar to a credit union.
• You want access to the latest cutting-edge technology or offerings such as cryptocurrency management or other alternative investments.

Why choose Patelco Credit Union

When you join Patelco, you become a member and an owner. We offer benefits for our members, including:

• Some of the best savings rates in the nation
• Rewards for on-time payments
• Free checking
• Online banking and the Mobile App with Anywhere Deposit
• Free overdraft protection from your Patelco savings account
• 37 branches, plus access to 6,000+ shared-service branches
• 30,000+ surcharge-free ATMs nationwide
• Credit cards to fit your lifestyle
• Car loans with flexible terms
• Affordable home loans
• Discounts on rental cars, car buying, vacations, and entertainment

The best type of financial institution for you depends on your individual preferences and needs. If you’re looking for lower fees and higher interest rates, a credit union may be the right choice for you. Explore the benefits for Patelco members and join today.