Bank or Credit Union: Which One Makes Sense for You?

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credit union vs banks
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Cats or dogs? Chocolate or vanilla? Beach or mountains? The next big this or that question that you’ve got to face: bank or credit union?

Both banks and credit unions come with their own sets of pros and cons, so whichever you decide to go with depends on which features you value most when it comes to your finances. Some of the biggest differentiators between banks and credit unions include:

  • Ownership and membership
  • Offerings
  • Rates and fees
  • Technology
  • Accessibility
  • Customer service
  • Insurance


Ownership and membership

Banks are for-profit financial institutions owned by investors. They are also overseen by executive leadership on a large, often national, level.

When you have an account at a bank, you are considered a customer, rather than a member like with credit unions. Therefore, you do not have a vote or say in how the financial institution operates — instead you’re at the mercy of leadership and corporate policies.

There are also no restrictions as to who may hold an account at a bank like there is at a credit union. You are generally eligible to open an account regardless of location, status, company, or organizational involvement.


Banks offer a wide range of financial products and services on both the personal and commercial level. Think:

  • Savings vehicles (savings accounts, money market accounts, certificates of deposit, and IRAs)
  • Personal and business credit cards
  • Personal and business loans
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Rates and fees

Since banks have investor pocketbooks to satisfy, their rates and fees tend to skew higher than credit unions. You can expect banks to offer higher interest rates on credit cards and loans but lower interest rates on savings accounts. When it comes to fees, banks charge higher penalties for fees such as overdraft fees, non-sufficient funds fees, late fees, monthly service charges, and ATM fees.

You may be able to avoid some of these fees if you hold a premium account and meet certain requirements, such as a minimum monthly balance, having a certain number of accounts at that bank, or direct depositing your paycheck into an account at that bank on a recurring basis.

However, you can luck out with low-interest-rate and low-fee accounts when you bank through an online bank or neobank. Considering online banks do not have as much overhead cost compared with brick-and-mortar financial institutions, they are able to offer lower interest rates on credit cards and loans, as well as low (or no) cost fees. However, even with an online or neobank, it can be difficult to complete with the low interest rates and fees offered by the credit unions.


Large, national banks tend to be more advanced in online services and financial technology than credit unions, as they have more money and resources at their disposal. Typically, they are able to more quickly add services to their online banking or mobile banking apps to accommodate customer wants and needs.


Since banks tend to have higher quality online services and technology, they are also usually more accessible for customers than credit unions are for their members. You can generally conduct your banking business either on a computer or through your phone no matter where you are in the world, which is handy for travelers.

Additionally, banks often feature a more broad ATM network, including partner banks, within the U.S. and around the world. If you need to access cash, make a deposit or withdrawal, or transfer money on the go, you’ll be more likely to find an in-network ATM if you use a bank rather than a credit union. Unfortunately, this may also make you more susceptible to ATM fees.

Customer service

If you run into an issue with your account at a bank, you might find customer service to be less than helpful, especially at a larger bank. That’s not to say that banks have terrible customer service, but rules and policies are often implemented and enforced by executive leadership at a much higher level. Therefore, if you call to request a fee refund, lower interest rate, or to file a complaint, you might not receive the answer that you are hoping for.

This shouldn’t deter you from contacting your bank when you need — or want — help with something. Assume that everything in life is negotiable, including the fees and rates on your debit or credit card. You should also assume that no one is going to take ownership of your finances — only you can do that. When you contact your financial institution to negotiate something, be polite yet persistent because it might take some convincing to get what you want.


Each account at a bank is insured by the Federal Deposit Insurance Corporation for up to $250,000.

Credit unions serve their members rather than stockholders; therefore, customer service at credit unions tends to be better than that at banks.

Credit Unions

Ownership and membership

Credit unions are non-profit financial institutions owned by their members. Since credit unions are owned by their members, they do not need to make a profit to satisfy the financial needs of investors, like with banks.

The goal of credit unions is to keep their members happy, and in turn keep the financial institution in operation. Therefore, credit union members are given the opportunity to voice their opinions on matters pertaining to the operation and products offered by the credit union. Members are even able to vote on matters that impact them and their finances. For this reason, the interest rates and fees at credit unions tend to be lower than those at banks.

In order to be a member of a credit union, you have to fall into a certain “field of membership” specified by the financial institution. These fields can limit credit union members to people who work at a certain company, live in a certain geographic region, go to a certain school, or are members of a certain organization.

Some credit unions are a little more flexible with membership. For instance, you may be able to simply pay a fee in order to become a member at a credit union.


The products and services that credit unions offer often cover basic personal banking needs, but they do tend to be more sparse than bank offerings. Credit unions are traditionally much smaller than banks, and their offerings reflect it, as they’re more limited when it comes to business accounts, investment opportunities, and credit cards.

Rates and fees

If you’re in the market for a loan, a credit union is the way to go. Without investors, credit unions consider members their top priority. It’s difficult to beat the interest rates offered by credit unions on loans such as car loans, personal loans, and mortgages. When it comes to your savings account, you can score higher interest rates at a credit union than you would for a similar account at a bank.


Given that credit unions excel in the rate and fee department, they unfortunately pale in comparison to banks when it comes to online services and technology. Fewer profits from interest and bank fees result in limited technological advancement. Credit unions are not stuck in the Stone Age, but if it’s important for you to be able to access your accounts wherever, whenever, a credit union may not be the best choice.


Most credit unions are smaller and locally owned, meaning that they are less accessible than banks in terms of in-person branches and in-network ATMs. If you have an account at a credit union, it’s important for you to have strong planning and time management skills so you will not find yourself in a bind and unable to access cash while you’re on the road.

Customer service

Credit unions serve their members, and when it comes to customer service, it shows. Customer service representatives at credit unions tend to be more flexible with requests from their members. After all, credit union members themselves are able to vote on a lot that takes place at the financial institution, so their voices definitely matter.

Given that many credit unions are smaller and tend to be more community-oriented, it’s common to build relationships with the people working at these branches, which may makes it easier to have a successful, productive conversation when it comes to your finances.


Each account at a federally insured credit union is insured by the National Credit Union Administration for up to $250,000.

How to Decide Between a Bank and a Credit Union

There is no right or wrong answer as to whether you should open an account at a bank or a credit union. It ultimately depends on what products or services you need, as well as what features would be nice to have in your financial journey.

The strongest features associated with banks include:

  • Extensive financial products and services
  • Strong online services and technological advancement
  • Accessibility

On the other hand, the strongest features associated with credit unions include:

  • A more close-knit community of leadership and members
  • Lower interest rates and fees
  • Excellent customer service

No matter what, you can rest assured that your money is safe and secure whether you use banks or credit unions, given that your bank accounts are insured by the Federal Deposit Insurance Corporation and your credit union accounts by the National Credit Union Administration.

Last Updated on January 01, 2024
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Disclaimer: The information provided in this website is for educational purposes only and should not be considered as financial advice. Consult with a financial professional for personalized guidance regarding your specific situation.
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