Credit Union Or Bank - Which is Better For You? By Nataliya Yakushev

Credit unions and banks provide almost identical services, including savings accounts, checking accounts, certificate of deposits and loans. Many also offer stocks and safe-deposit boxes.

Given that the services are basically the same, is there any reason to choose one institution over the other? Yes, because those services are not always created equal.

Pros

• Credit unions are not-for-profit organizations, while banks are for-profit and in the business to make money for shareholders. A credit union's focus is on providing savings and quality services to its members, which generally results in higher interest rates on savings accounts and lower interest rates on credit cards and loans. If you compare loans, money market accounts, certificate of deposits (CDs), and mortgages between unions and banks, their rates will win every time.
• Because credit unions are non-profit organizations, if they earn more than it costs them to operate the business, the additional profits are distributed to the members as dividends.
• The average overdraft fee charged by unions is $25; banks charge an average of $39 per overdraft. There's a similar disparity in late fees for credit cards.

Cons

• While you may get the highest rates on your savings products and lowest rates when you borrow money through a credit union, you might find that it charges higher fees for using the ATM. If you're someone who uses the ATM regularly, the higher fees paid may cost you more than the benefits earned through higher savings rates.
• To become a member of a union, you usually have to meet certain criteria. If you don't meet the eligibility requirements, it won't matter how much better that credit union would be for your financial situation compared to the local bank - you won't be allowed to open accounts at the union.
• Credit unions aren't insured by the Federal Deposit Insurance Corporation (FDIC), although they may be insured by the National Credit Union Administration. Be sure to check before you become a member and open an account.

Bank Pros

• As long as you're at least 18 years old, most banks will allow you to open a savings account regardless of where you live, work, worship or attend school. Unions often require that members meet a variety of eligibility criteria to become a member, although it's gotten easier to qualify for credit union membership in recent years. Most of the time, you're eligible based on your employer, place of residence, or through a family member's eligibility. Some unions allow you to join by paying a membership fee.
• Money held at banks is insured by the FDIC.
• Banks have more branch offices than the typical union, which means it may be easier to do your banking unless you choose a small, local institution. Many unions have formed networks that make accessing ATMs easier, just as there are banking networks that make it possible for you to access your bank almost anywhere in the world.

Bank Cons

• Banks are for-profit organizations, which means they create fees and higher interest rates on money they lend in order to turn a larger profit.
• Savings products receive lower interest rates than credit union savings products.

Which one is right for you?

Choosing between those two comes down to how you plan to use your financial institution. Visit the banks or credit unions that you're interested in doing business with, and compare the products that you're interested in using. If you want a savings account and a checking account, compare the rates and fees on both to find the one that offers you the best deal.