This is worth considering before opening financial accounts. Both offer similar conveniences. Especially, if the credit union has good online services and is a member of a co-op with access to branches and ATMs. Both also offer equal safety for your money with federal government-backed insurance. But there are significant differences to consider.

Banks

Banks are owned by investors and must make a profit for them. Anyone can open a bank account, but customers can’t vote or say how the bank should be run. Banks also offer personal and commercial banking products. They offer investment and savings vehicles like IRAs, certificates of deposit, and money marketing accounts. The interest rates offered by banks may be competitive, but they are beaten by online banks and credit unions in this regard. Banks also have higher fees. Their free checking accounts come with a minimum balance or requirement for a mortgage or a credit card. Banks also tend to spend more on technology and add technical services faster than credit unions. Their mobile banking services are also relatively advanced.

In terms of customer service, banks are inflexible as their rules are enforced by their executive leadership and board of directors.

Credit Unions

These are non-profit institutions owned by their members. The goal of credit unions is not to make a profit for members but to keep their fees low, offer high-interest rates on savings accounts, and low-interest rates on loans. Their customer base is limited to their field of membership which could be a workplace, school, place of worship, an area, or the membership of an organization. Credit unions are smaller than banks and offer fewer investment products. They’re often limited to checking and savings accounts and credit cards. Many offer checking accounts with no minimum balance and no monthly service charges. Their fees for errors like bounced checks may be lower as well. Small credit unions have limited budgets for investing in technology, but national credit unions may offer most digital banking services.

Credit unions are often flexible and want to serve their members. All members have equal voting rights, and since their membership is small, they are able to build relationships and manage member needs better.