Banks vs. Credit Unions: Who deserves your money?
Updated: Feb 25, 2021
What is the difference between banks and credit unions?
Banks are for profit-businesses that are owned by investors. It’s common for banks to offer relatively high-interest rate loans to borrowers and issue low-interest rate savings accounts to savers as this will help the bank grow their revenue. Banks typically offer other services like asset management for customers who would like their investments to be managed. A benefit with working with a national bank is that they can be found across the country, and possibly the world. This provides convenience to you if you aren’t in your hometown and need access to the bank you work with.
Credit unions on the other hand are non-profit businesses that are owned by its members. They view the people that do business with them as members, not customers, unlike banks. Credit unions look to benefit their members the most in their relationship by working to offer relatively low-interest rate loans and issue high-interest rate savings accounts to savers. Also, credit unions limit their membership by having a “field of membership” stating who can and cannot become a member. For example, a few of the criterion for opening an account with MSUFCU is that you must have attended MSU, live in a specific county, or work in Michigan.
This is a basic comparison between banks and credit unions. When it comes down to you trying to get the best rate for a savings account or a loan, don’t just go with your nearest credit union. Do some research on the available options so you can get the best bang for your buck!