Posted on March 15, 2022 Last Updated: March 15, 2022
Choosing the right financial institution is important because, at the end of the day, everyone wants a good banking partner to hold their hard-earned money. When it comes to choosing where you save your money, deposit your paycheck, borrow for loans, etc., most people will decide between a bank and a credit union. Although they may seem similar on the surface, there are some more nuanced differences that we’ll go through below:
Ownership
One of the biggest differences between banks and credit unions is their ownership structure. Banks are owned by investors, with the goal of generating profits for the shareholders. Oversight of corporate banking operations is provided by a Board of Directors who steer the bank toward profitability. On the other hand, credit unions are not-for-profit financial cooperatives owned by their members. That usually means that credit unions provide lower-cost banking solutions, better rates on savings, superior support and service to their members – who are also the shareholders – and are supportive of their local communities. Credit Unions are similarly governed by a Board of Directors, but they are elected by the credit union members. This contrast of ownership and governance of banks versus credit unions typically results in a better, more personalized banking experience from credit unions.
Banking Products
Nowadays, most credit unions offer all of the same products and services as their banking counterparts. However, they’re usually met with higher rates on savings accounts and lower rates on loans.
Interest Rates
As previously mentioned, credit unions typically offer lower interest rates on loans, than traditional banks. How does that work? Since credit unions are non-profit, they often take the ‘profits’ generated by their products and use them to offer reduced interest rates. This is one of the main competitive advantages that credit unions have over traditional banks.
Banking Fees
Since credit unions exist to help their members thrive financially, they will typically offer reduced fees for their members, as well as free services in many cases. Traditional banks typically have some sort of a fee associated with their accounts unless you meet a set of standards, like minimum balances requirements, and often charge higher fees for common banking errors such as insufficient funds, courtesy checks, stop payments, etc.
Customer Service
With a mission focused on supporting their members, credit unions almost always have an advantage when it comes to service and support. When you call a credit union, you will talk to someone who lives and works in your community, versus a regional or offshore call center that traditional banks may use, so they can better understand your unique needs.
Widespread Availability
Most credit unions are hyper-localized, so if you move out of state, or travel out of your city, you may lose the ability to physically go to a branch of your credit union. Bigger banks often have branches and ATMs located in most major cities. But, most credit unions participate in a network of surcharge-free ATMs, as many as 50,000+ and growing, plus shared branching capabilities. Shared branching allows credit union members the ability to visit another credit union in the network to process banking transactions. Plus, with the expansion of digital banking and adoption of technology by most credit unions, banking with a credit union is possible wherever you live, move or travel.
Choosing the Right Banking Partner
Historically credit unions lacked some of the mobile and technology features the traditional banks offered. However, that is no longer the case. Most Credit Unions have a full suite of online and mobile banking products and services, as well as virtual account opening, and more, just like their banking counterparts. So don’t let the fear of inconvenience stop you, most credit unions are easy to access.
KEMBA Offers 1-Stop Banking
With our award-winning local member service team, our full suite of personal and business banking products, plus our Digital Banking platform, KEMBA offers all of the same products and services as a traditional bank. If you are a Central Ohio resident and looking to make a positive banking change, contact us at 614.235.2395 and select Option 4 for more information. Find out why KEMBA is a better way to bank.