The three main differences between banks and credit unions are:
Banks and credit unions typically offer very similar products and services, and going with either can probably get you a checking account, savings account, certificate of deposit (CD) and a credit card or two.
But just because these institutions offer similar services doesn’t mean they’re cut from the same cloth.
Credit unions are member-owned and non-profit, meaning the institution itself is controlled by its members. In practice, this means “profits made by credit unions are returned to members in the form of reduced fees, higher savings rates and lower loan rates,” wonderfully explained by MyCreditUnion.gov.
Banks are owned by stakeholders and are for-profit, so banks are in it to make money for their stakeholders. They still have to offer competitive rates and products to stay in business and attract customers, but a bank’s ultimate goal is to turn a profit.
In short, banks prioritize growth and resources, while credit unions prioritize serving their local communities.
Credit unions focus on their members, often with limited service areas and few fees. They may not always offer direct lending, but they frequently give back through nonprofit work.
As for-profit institutions, banks usually have more capital to open more branches nationwide, invest in tech and build their own ATM networks.
Banks are insured by the Federal Deposit Insurance Corporation (FDIC). Credit unions are insured by the National Credit Union Administration (NCUA).
Both the FDIC and NCUA are independent federal agencies that offer deposit insurance for customers at banks and credit unions. The FDIC and NCUA both insure deposits up to $250,000, per depositor, per insured bank, per ownership category. The coverage is the same, so going with a federally insured bank or credit union means your deposit accounts are covered. The US Congress established both agencies to ensure consumer deposits. These agencies also help monitor financial institutions to ensure safety for consumers and handle bank failures.Does this difference matter? Not really
Credit unions have membership requirements, and banks don’t.
Credit unions require you to become a member before you can access their products and services, including opening a deposit account or getting a loan.
Banks don’t have “member” requirements. If you apply and meet the requirements for the account or loan you want at the bank, you’ll probably be approved.
You can’t become a member of any credit union you want.
For most credit unions, you have to be living, working, attending school or worshipping in their service area. There are a few credit unions with nationwide membership eligibility, such as Alliant or Navy Federal, but they still require getting a membership before using their services.
Banks, on the other hand, really only require you to be in a state that they serve, and many large banks have national reach in the US. Banks like Chase, SoFi and Wells Fargo don’t have state or area requirements, so if you like their services, you can simply apply for an account without needing to qualify for a membership first.
It’s a hard question to answer, and it’s going to come down to your preferences. You don’t have to just choose one, either — you can have as many financial accounts as you’d like and can reasonably manage.
"Personally, I do my everyday banking with a local credit union, but I do my investing, saving and borrowing with a few different banks.
My credit union doesn’t charge monthly fees on my checking or savings accounts, so it’s great for everyday cash without worrying about minimum balances or monthly fees. But the savings account doesn’t have a very good APY, and its credit card options lack strong rewards programs. You can use different institutions for different reasons that best fit your situation — you don’t have to put all of your money in one basket."
Of course, not all credit unions and banks are the same, so exact features, products offered, access and fees will vary. But in general, here’s what you can expect when comparing banks and credit unions:
| Feature | Bank | Credit union |
|---|---|---|
| Has deposit insurance | Yes | Yes |
| Has online banking | Yes | Yes |
| Has membership requirements | No | Yes |
| Usually charges monthly fees on deposit accounts | Yes | No |
| Usually has nationwide branch and ATM access | Yes | No |
| Often offers in-house investing and lending services | Yes | No |
Narrow down top checking accounts by features, fees and APYs. For a closer look, tick the Compare box on multiple accounts to see them side by side.
We currently don't have that product, but here are others to consider:
How we picked theseThe Finder Score crunches over 300 checking accounts from hundreds of financial institutions. It takes into account the product's monthly fees, overdraft fees, opening deposit, customer support options, ATM network and features — this gives you a simple score out of 10.
To provide a Score, Finder’s banking experts analyze hundreds of checking accounts against what we consider is the best option: no monthly fees, no overdraft fees, a large ATM network of 50,000 or more, additional features outside of typical banking services, and the optional perk of earning interest. Accounts that are nearly free to maintain and use are scored the highest, while accounts with costly fees and few features are scored the lowest.
If you want local branch access without having to worry about high monthly fees to maintain everyday accounts, a credit union is a great choice. But if you need a sophisticated mobile app, nationwide branch and ATM access, or specialized financial products, a bank is a solid choice.
Compare more bank accounts by type to learn about your options and see top providers.
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