Credit unions vs. banks: Which is best for you?
Figuring out how to best save up your money or find financing sources can be difficult to navigate with all the options set before you. One of the more immediate choices is between a bank or credit union, and you might be asking yourself, “What are the benefits of a credit union vs. a bank? Which one has lower interest rates on loans? Which one will earn me more money overall?”
Most people know what services your average, modern-day bank generally offers, but the benefits of a credit union are not so widely known. Depending on your situation, when you compare the benefits of a traditional bank to a credit union, the latter may be a better fit. We’ll go over why that may be below.
Which has better benefits, a credit union or a bank?
Most banks operate as for-profit financial institutions that answer to stakeholders. In this environment, the focus on profits influences everything from lending decisions to interest rates assigned to loans. Earnings are often returned to private investors or shareholders, not customers. Unlike credit unions, banks often maintain a distant, transactional relationship where customers exchange money for services.
But when you open an account at a credit union, you become part owner of a not-for-profit cooperative financial institution. Unlike bank customers, credit union members have voting rights that give them a say on matters related to the direction of the institution. But the real draw of not-for-profit credit unions is that profits are redistributed to members in the form of:
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