Driving down the street and you pass a couple buildings. One says the words “credit union” and the other says “bank” on it. You know these are places people just go to deposit money, have checks, pay bills, and so on. But are they really that identical? The answer is no.
A credit union is different from a bank in that it has a different organizational structure, rates, fees, and internal infrastructure. A credit union is a membership organization that operates on a non-profit basis with members, not accounts. Many of these institutions require some sort of “bond” to join and this can be simple to achieve: same employer, same geographic area, or some sort of association. By being a credit union member your money is used to run the day to day business and you’re buying shares, so members own and run these. Since these are non-profit organizations much of the profits go back to the members in the way of lower fees, higher earned interest rates, and so on – allowing you to save more money.
Drawbacks of Joining a Credit Union
One of the biggest drawbacks to using a credit union is the reach, in terms of ATMs. These typically only have a local presence and do not stretch much further than the same state, or city. A credit union also may offer less services, but higher quality services, than a traditional bank. These credit unions don’t always have the money to offer a large selection of products to the members. Due to some credit unions being smaller they also may be lacking in technology and not have the ability to handle online banking.
Is a Credit Union Right For You?
Well, only you can decide that. Choosing between a bank and a credit union really depends on what you’re looking for. Both are insured up to $250,000 so your money is safe in either in the event something happens. If you travel a lot you may not benefit from a credit union but may get some better benefits from a bank, like ATM access or special perks for certain purchases. You should think about your priorities and what you expect an institution to provide for you and go with what would be best for you and your money.