Banks vs. credit unions: The pros, cons of each and how to choose which is right for you
Banks are for-profit and credit unions are not-for-profit, meaning different things for customers.
Deciding where to store your money, open a credit card or apply for a loan can be overwhelming. To make it even more difficult, your choice of banking institution — whether it be a bank or a credit union — plays a big part in the type of experience you’ll have.
Below, CNBC Select digs deeper into the difference between banks and credit unions, outlines the pros and cons of each and helps you decide which to choose.
How banks and credit unions differ
Banks and credit unions are both financial institutions that offer products like checking accounts, savings accounts, mortgages, auto loans and personal loans. Both institutions also offer advisory services and online banking, and both are safe: Your funds in a bank or a credit union are insured by either the FDIC or NCUA, respectively, for up to $250,000 per account owner. Banks and credit unions differ, however, in how they operate.
Banks are generally for-profit institutions while credit unions are not-for-profit institutions serving a certain community, the latter meaning their profits are distributed to their members. For this reason, credit unions will sometimes offer better rates and fees than a large, national bank — but they have more limited access.
