Credit unions vs. banks: what's the difference?
Credit unions are nonprofits owned by their members. They often pay better rates and charge lower fees. Here's the trade-off.
Written for plain-English understanding by Joseph Citizen. Why I built this →
Banks are for-profit companies owned by shareholders. Credit unions are nonprofit cooperatives owned by their members — the people who deposit money there. The structural difference shows up in fees and rates.
Where credit unions usually win
- Lower fees on overdrafts, ATMs, and account maintenance
- Better savings rates on average (though the best online banks still beat them)
- Lower interest rates on loans, especially auto loans
- More personal customer service
Where banks usually win
- Bigger branch networks if you travel a lot
- More sophisticated mobile apps and online tools
- Wider ATM networks
- Faster product innovation
Insurance — the same protection
Federally-insured credit unions are covered by NCUA insurance up to $250,000 per account ownership category — the same coverage as FDIC at a bank. Different agency, identical protection.
Keep the momentum going.
How banks actually make money
Understanding the bank business model helps you understand why your savings rate is what it is, and why banks fight so hard for your checking account.
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Important
This lesson is general financial education only. It is not personal investment, tax, accounting, or legal advice. Examples are illustrative. Past performance does not guarantee future results.