If you’ve ever wondered what the difference is between a credit union and a bank, you’re not alone. While both offer similar financial services like checking accounts, savings accounts, and loans, the way they operate is fundamentally different. Understanding the advantages of credit unions can help you decide if membership is right for you.
Q: What’s the difference between a credit union and a bank?
A credit union is a member-owned, not-for-profit financial cooperative. Unlike banks, which are owned by shareholders and focused on generating profits, credit unions exist to serve their members. This means better rates, lower fees, and a voice in how the organization is run.
Q: What do I need to know about credit unions?
When you join a credit union, you become a part-owner. Every member holds a share and has a vote in the growth, development, and direction of the organization, regardless of account size. It’s banking that puts people over profits.
Being a not-for-profit organization, our primary motive is to serve our members – not to earn a profit or to serve stockholders. Because of this, we are able to offer great savings rates, low lending rates, and minimal fees to our members.
A group of member volunteers serve on the AGCU Board of Directors, meeting with the Executive Team and helping to oversee the direction of the organization.
Credit Union | Bank | |
Ownership | Member-owned cooperative | Shareholder-owned |
Profit motive | Not-for-profit | For-profit |
Rates | Typically higher savings rates, lower loan rates | Typically lower savings rates, higher loan rates |
Fees | Generally lower | Generally higher |
Decision-making | Members vote | Shareholders/Board decide |
Federal insurance | NCUA (up to $250K) | FDIC (up to $250K) |
Each account is insured by the National Credit Union Administration (NCUA) to at least $250,000. NCUA maintains one of the largest and strongest levels of financial reserves in America and is backed by the full faith and credit of the United States Government.
