What’s the difference between a credit union and a bank? Nothing, they both store your money. Ha ha, just kidding! On the outside, credit unions and banks are very similar financial institutions as far as structure goes. The biggest difference between a bank and a credit union is that a bank is for-profit whereas credit unions are non-for-profit. That right there makes credit unions better than banks. But, considering True Sky is a Credit Union, that’s considered biased, so keep reading below to see BOTH pros and cons of credit unions vs banks.
What Is A Bank?
In simple terms, a bank is a financial institution that is licensed to accept deposits, make loans, and provide other financial services like finance management, currency exchange, safe deposit boxes, etc. “Bank” is actually a general term that encompasses retail, commercial, corporate, and investment banks. In most countries, banks are regulated by the government or a central bank. For example, The Federal Reserve is one of the branches that helps regulate banks in the U.S. As you probably have guessed, banks are a very important part of our economy, providing services to consumers and businesses alike. The goal of a bank, much like your typical corporation, is to earn a profit for its owners. With that being said, banks charge more interest on loans and other debt they issue to borrowers as a way to keep the money supply going. Due to this unfortunate fact for the public, banks are typically larger, focusing on the steps necessary to grow their business rather than making their customers happy.
Pros of a bank
- Resourceful apps and tools
- Added conveniences
- Safe place for your money
- Interest rates are typically offered with saving accounts to grow your money
Cons of a bank
- Loose eligibility requirements
- Higher interest rates
- Transaction fees
- Wide range of other fees (for example, overdraft fees)
- Poor customer service
What Is A Credit Union?
A credit union is a non-for-profit financial institution that offers unique benefits that you won’t find at a bank and is owned by the people who use its financial services. Credit unions can offer the same things that banks do like credit cards, checking and savings accounts, loans, etc. If you are a part of a credit union, as a member you will elect a board of directors, usually volunteers, to ensure that your interests are being considered. With that being said, credit unions have the common goal of serving their members rather than a corporation. Just like a bank, credit unions do charge interest and account fees, but the profit goes right back into the services they provide. A common misconception about credit unions is that the deposits aren’t protected, which isn’t true. Credit unions are insured by the National Credit Union Administration, and most credit unions provide the same $250,000 insurance that banks do. Credit unions can vary in size, from small community-based unions to larger ones with multiple branches to serve more people across the state or even country.
Pros of Credit Unions
- Lower interest rates on credit cards and loans
- Higher interest rates on deposits
- Lower fees
- Personalized customer service
- Deposits are insured the same way banks are
- Greater financial literacy resources
- Less rigid eligibility requirements
Cons of Credit Unions
- Membership is required
- Fewer product offerings
- Limited branch locations
Why True Sky Credit Union?
The bottom line is that there are so many types of bank and credit union offerings that in the end will require you to make the decision yourself. Here at True Sky, we would encourage you to become a member with us and to take advantage of everything we offer. We offer a variety of loans including home, auto, and personal loans, as well as credit cards, savings, checking, IRA accounts, and more. We have been serving the Oklahoma metro area for 76 years and counting. “Our mission is serving our members to the best of our ability, empowering communities to become educated in finances, and enriching our members’ lives by knowing who is handling their money. We aim to provide high-quality service, empower our members, enrich their lives, and make their dreams come true.” To see a full list of pros and cons of a bank vs credit union, make sure to check out our website on the about page.
Don’t know where to start? We got you! Give us a call or visit our website to find one of our 16 locations near you. When you become a member with True Sky, the sky’s the limit to what you can do.