You may have many choices when it comes to opening an account. One of those will be to choose a bank or a credit union. While banks and credit unions appear similar– both offer various types of accounts and have tellers or customer service representatives – they have different structures.
Banks are for-profit businesses whose function is to make money for their shareholders. If you use a bank, you are a customer.
Credit unions are not-for-profit organizations whose mission is to serve their members with banking products and services. If you use a credit union, you are the member of a nonprofit cooperative. Often, savings accounts are called share accounts, while checking accounts may be called share drafts.
Banks may offer more diverse products and services to fit the needs of many different customers. Because they have many customers, they may be able to offer some financial products and services at a lower cost to their customers than credit unions.
If a credit union is something you want to explore, there are factors to consider:
- Is there a credit union near you?
- Do you qualify for a credit union membership? Credit unions serve fields of membership. This can be characterized by working for a specific employer or living in a specific community. There may be a separate credit union membership fee.
- Does it offer the products and services that you are looking for?
- Does it have the online functions that you prefer for managing your money?
In addition to serving their membership with lower cost financial products and services, credit unions also fulfill their missions by providing other services in the community such as financial education classes, help for small businesses, and other service potentially not available at banks.
Consider your lifestyle and what you are looking for in a financial institution to help you choose the right place for you.