Which Is Better? Banks or Credit Unions

by MSE Staff | Published 1 Mar 2022 

It is Sunday evening, and you are visiting a festival in another town. It happens once a year and the food is out of this world. Waiting in line feels like agony but you finally get to the register. “We only take cash,” they say. A wave of embarrassment rushes through you. Of course! How could you forget! You walk over to the ATM and wonder if this will result in out-of-network fees. You are not even sure how much it will cost you. Thankfully, you saved for the festival throughout the year, and it will not be a problem.

 Deciding where to bank can include a lot of caveats like when and where you can access your money and any costs associated with managing your money. In this post, we will identify key differences between banks and credit unions so that you can be prepared in the future.

What Is a bank?

A bank is a for-profit financial institution that offers financial services like check cashing, checking accounts, savings accounts, direct deposit, online banking, branch banking, and automated teller machines (ATM) to name a few. Banks vary in size from small organizations to large organizations. A key feature of larger banks is convenience. They have vast networks with branched banking and ATM services in multiple countries. Of course, for-profit banks view you as their customers and aim to make money for their shareholders and investors. This means that banks generally have more expensive fees than credit unions which we’ll cover next.

What Is a Credit Union?

A credit union is a non-profit financial institution that offers the same types of services that you would find at a bank. And much like banks, credit unions vary in size with large and small organizations. However, credit unions focus on serving their community. They may have agreements with other credit unions to extend branched banking and ATM services to other communities. However, you may be required to be a part of that credit union’s community in order to become a member. Since credit unions are non-profit, their fees generally cost less than banks and they re-invest money they make to serve their members.

Final Thoughts

Choosing where to bank really does have an impact on our daily lives. As life circumstances change, you may want the convenience of a bank or the reduced costs of a credit union. Take a look at how often you travel and consider what you’re most comfortable with. Analyze and evaluate the fees and services offered by your prospective bank or credit union to see which one is a best fit for your lifestyle. It may take some due diligence on your part, but the peace of mind that comes with it will pay off the next time you need to use an ATM!