Differences between Banks and Credit Unions

When choosing a financial institution to trust with your money, it is essential to research the places you are considering. In almost every community, you will find both banks and credit unions. However, there are three main differences between banks and credit unions that you should understand as for the best option for your financial situation.

• For-Profit vs. Nonprofit – Credit unions are not for profit, exempting them from federal taxes. Because credit unions are exempt from federal taxes, they can usually offer higher savings rates and lower interest rates on loans compared to banks. Banks, on the other hand, are for-profit entities.
• Membership – Most banks don't have any requirements to join, and many credit unions do have requirements to join. Depending on the institution, you may need to belong to a common purpose, such as where you live, work, etc. However, if you aren't part of a specific group, membership is still attainable in most cases.
• Ownership – Due to credit unions being customer-owned, members act as investors in the organization, resulting in attentive and personal customer service. On the other hand, banks are owned and controlled by stakeholders.

Check out this Credit Karma article for more differences between banks and credit unions. American 1 Credit Union offers many benefits to being a member, and you can learn more here.

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