There’s a popular meme making the rounds that states, “Christmas Rules: #1. Don’t go into debt...
From the outside looking in, credit unions and banks may seem very similar. After all, they are both financial institutions where you deposit your money, right? But there’s a lot more to these organizations than meets the eye. We’re here to help you understand the difference between a bank and credit union, to help you place your financial future in the right hands.
The Same Great Services and Assurance From Your Bank Offered at Credit Unions
Both credit unions and banks offer their members general financial services and products, such as the following:
- Withdrawals, deposits, checking services, etc.
- Checking and savings accounts
- Loans for cars, homes, personal, and more
Your money, as well as your business, is equally insured at any reputable bank or credit union. Federal organizations protect the members at both types of institutions. The FDIC insures money at banks and the NCUA insures the money of credit union members.
Your average banking institution is much like any other business or company. Its goal is to make money for the company and its employees. Unlike for-profit banks, credit unions are based on the opposite business model. Credit unions are not-for-profit organizations, which uses its profits to promote the best possible service to members. Because credit unions do not work to make money, they are committed to working only for the benefit of its members.
Because of a credit union’s not-for-profit status, they are cooperative institutions run for the benefit of its members. This means that members at credit unions are also part owners of the company. Members have a say in the decisions made at credit unions, including who is running it and how they should run it. As part owners, members are also entitled to the profits of the credit union, which are distributed to the members through a variety of ways including dividends and low rates.
At a bank, almost any adult can walk in and create an account there. This results in less personalized service and a lack of focus on benefits. Credit unions are able to offer their members amazing benefits for life because credit unions are based on community membership. Unlike banks, members of credit unions all share a certain bond, which is required for membership at the institution. Requirements for every credit union is different, but can include things like where you live, work, go to school, worship religion, and more.
Banks cannot offer the same low rates and fees as credit unions because they are for-profit organizations. Instead of working with the goal of making more money, a credit union is run by and run for its members. This allows the credit union to take its profits and give them back to the members in the form of low rates and interest, zero fees, free checking, etc.
Every member of a credit union shares some special, local bonds. As local, community institutions, credit unions are a reflection of its members. This means you’ll always find your local credit union involved in small business needs, educational programs, consumer outreach, and local events. With a sole focus on its members, credit unions focus on what’s important to you.
To find out more about what becoming a credit union member can do for you, come see us here at Marine Federal Credit Union. Our mission of working together to secure and protect your financial success is just one of the reasons Marine Federal stands out above the rest!
Federally insured by NCUA. Membership and credit eligibility required. Equal Housing Lender.