Advantages of Banks Over Credit Unions
- More financial services and products: Credit unions typically focus on a small number of primary services, like loans, credit cards, and deposit accounts, whereas banks offer a wider range of products and services. In addition to offering standard banking products, many banks also provide investment accounts and financial advisory services.
- ATMs and physical branches: Banks’ physical locations are one of their key selling points. Many people prefer to have access to ATMs and bank tellers, ideally in their immediate neighborhood. Even though most banking is done online these days, some customers still find banks to be preferable to credit unions because they can visit a branch or need cash withdrawals.
- Improved mobile and online banking options: Banks typically have more sophisticated websites and mobile apps, which simplify account management. While many credit unions provide online banking, there are differences in the quality and accessibility of their mobile apps. When it comes to mobile or laptop banking, banks are probably going to be a better option than credit unions.
Advantages of Credit Unions Over Banks
- Less requirements and fees: Compared to banks, credit unions typically have more flexibility and less expensive overhead. For instance, credit unions are more likely than banks to provide checking accounts with no minimum balance requirements or monthly maintenance fees.
- Better interest rates on loans and savings accounts: Credit unions provide better interest rates on loans and savings accounts, which is exactly what customers want. While lower interest rates on loans make borrowing money more affordable, higher rates on bank accounts help your money grow more quickly.
- Alert customer service: Credit unions typically offer superior customer service because they are smaller and dedicated to serving members rather than investors. Credit union staff members are likely to provide you with individualized attention and assist you in determining which services best suit your needs—something that big banks frequently fail to do.
The fact that credit unions are not protected by the Federal Deposit Insurance Corporation, or FDIC, is a frequent source of worry. Congress established the National Credit Union Administration (NCUA) in 1970 to guarantee deposits in credit union accounts, despite the fact that credit unions are not covered by the FDIC insurance.
A government organization called the FDIC insures deposits up to $250,000 per depositor, per insured bank, and for every type of account ownership. The FDIC will reimburse account holders for any money owed from their accounts in the failed bank in the event that your bank fails or runs out of money. Since 1933, FDIC insurance has been in place to stop the panic and bank runs that followed bank failures in the 1920s and early 1930s.
Prior to 1970 and the NCUA’s establishment, credit union members lacked this kind of insurance in the event that their financial institution abruptly failed. Similar to FDIC insurance, NCUA insurance provides up to $250,000 in guarantees for each account ownership category and share owner per insured credit union in the event that the credit union closes or enters conservatorship.
All federal credit unions and most state credit unions are insured by the NCUA. At the NCUA website, you can see if your credit union is covered, and NCUA-insured credit unions always prominently display their insurance status on signage in their branches.
Find the Best Credit Unions of 2024
Which type of financial institution—a credit union or a bank—will be more suitable for you and your family?
Pros
- Accounts FDIC-insured up to $250,000
- Convenience
- Financial technology
- Likely more branches and ATMs / More products offered
Cons
- More and higher fees
- May offer lower APYs on savings vehicles
- Higher interest rates on loans
Pros
- May offer lower interest rates on loans
- Higher APYs on savings vehicles
- Fewer and lower fees
- Excellent customer service and financial education
- Accounts NCUA-insured up to $250,000
Cons
- May have fewer branches and ATMs
- Less access to financial technology
- Fewer products offered
- Eligibility requirements to become a member
Making the Right Choice for Your Money
Although they provide many of the same goods and services, banks and credit unions are not the same. A bank might be a better option for customers who require nationwide convenience, simple access to mobile banking, and a large selection of products. However, credit unions may be a better option for customers who require lower rates and fees, higher APYs, individualized customer service, and access to first-rate, free financial education.
Find The Best High-Yield Savings Accounts Of 2024
What matters most when selecting a bank or credit union is your values. Banks may be preferred by customers who value technology and in-person services, but credit unions may be a better fit for those who prioritize better rates and customer support. You must weigh all the options to determine which one best suits your banking requirements.
Frequently Asked Questions (FAQs)
Credit union loan processing times vary depending on the type of loan you’re applying for and the lender. After submitting your application, you should typically hear back within one to seven business days. The loan money should be in your account within a few days to a week if it is approved.
How to close a bank or credit union account?
In order to close an account at a bank or credit union, you usually need to call and make a request through the customer service number. Be advised that while some institutions may allow you to start the request process online, others may require you to visit a branch to finish the process.
How long does an international transfer take for credit unions and banks?
For banks and credit unions, international transfers usually arrive within one to seven business days; however, the precise transfer times differ depending on the currency. On the website of your bank or credit union, you can find information about international transfers.
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Personal finance writer Theresa Stevens works out of Boston, Massachusetts. She possesses firsthand experience assisting individuals in resolving their financial difficulties as a former financial advisor. When she’s not writing, you can find her exploring a new karaoke bar or organizing her upcoming international vacation. lorem Is it really your intention to put your decisions on hold? The Forbes Advisor editorial staff is impartial and independent. We receive compensation from the businesses that advertise on the Forbes Advisor website in order to support our reporting efforts and keep this content available to readers for free. This compensation comes from two main sources.
FAQ
Which is better for you a bank or credit union?
If you qualify for membership, credit unions can be a great option for a low-interest loan, cheaper closing costs for mortgages, or fewer fees. Greater options for products, apps, and commercial or international goods and services may be provided by larger banks, and anyone can sign up.
Why would someone use a bank instead of a credit union?
For example, you might prefer a credit union if you want better deposit rates and don’t need access to branches across the nation. A bank might be a better option if you want in-person services and don’t mind paying lower interest rates.
What are 3 differences between a bank and a credit union?
However, credit unions are typically not-for-profit, smaller, and operate locally than banks. They frequently provide better interest rates for deposit accounts, lower loan rates, and fewer fees than traditional banks.
Read More :
https://www.forbes.com/advisor/banking/difference-between-bank-and-credit-union/
https://www.usnews.com/banking/articles/credit-union-vs-a-bank