Banks and credit unions offer financial services and perks like bank accounts, mortgages, ATMs, loans, online banking, mobile banking, and bill pay. Both offer coverage by the federal government in case of closure (FDIC and NCUA). However, banks and credit unions view money and customers differently, from its operation and ownership to bank services and accessibility.
Community, regional, and national banks are for-profit banks. Their sole existence is to make money. Customer service is significant yet takes a back seat to profits. Banks can be private or public companies.
Credit unions are not-for-profit banks. Their sole existence is putting the customer first. Treating the customer right and earning the customer’s loyalty is more important to credit unions than making a profit. All credit unions are private institutions.
Customers Versus Members
Owners of a public bank are the shareholders or investors. The shareholders or investors decide on upcoming financial changes to bank services based on profitability. Their decisions may or may not affect your banking habits. All public banks are on the NYSE. Meanwhile, a family, general partner, or limited partner makes decisions in private banks. Anyone can open an account at a public or private bank.
Owners of a credit union are the customer. Credit unions call their customers “members.” As a member, you are part of a tight-knit community where you are part owner. Members can vote on changes happening to the bank and its services. Members also vote to add or remove board members. To be a member, you must join by proving that you are part of the community through family, an organization, employer, or geographic location.
Products and services are where banks thrive. Their massive offerings of savings and checking accounts are impressive. Examples are money market, retirement accounts, certificate of deposit, interest-earning accounts, credit cards, e-banking, insurance, teen, student, and over 55 bank accounts. There are business and personal accounts too. Consequently, bank services charge high fees and interest rates.
Credit unions offer lower interest rates and fees, yet the balance is basic accounts with few variations. Their focus is only on personal accounts.
Banks are attractive to the average consumer because of their accessibility. You can visit a nearby branch anywhere in the country for banking or correcting issues with your account.
Meanwhile, credit unions do not have bank branches as there is only one credit union in the community. Credit unions understand this and have compensated for it through co-op partnerships to offer nationwide ATM and branch access. Conversely, some credit unions buy out community banks across different cities and states to achieve the same result.
Banks have a vibe of caring more about the bottom line than customer service. Credit unions have a vibe of a higher standard. They only want members who want to contribute to the community. The best bank for you is one that suits your needs.