Credit unions are nonprofit and member-owned, often with lower fees and better rates, while banks are for-profit and usually offer more branches and tech.
Ownership
Credit unions are not-for-profit and owned by their members. Banks are for-profit and owned by shareholders.
Costs
The National Credit Union Administration (NCUA) reports credit unions generally offer lower loan rates and fewer fees. Savings rates are often higher.
Insurance
Deposits at credit unions are insured by the NCUA up to $250,000 per depositor. Banks are insured by the FDIC for the same amount.
Access
Banks have more branches, ATMs and technology. Credit unions require membership (location, employer or group).
Services
Banks may offer more products and business services.
Numbers
About 140 million Americans are credit union members.
Choose
Compare fees, rates and convenience.
How they are structured
Banks are for-profit corporations owned by stockholders, and they aim to maximize profit. Credit unions are not-for-profit cooperatives owned by their members, and each member has one vote regardless of deposit size. A credit union’s profits return to members as lower loan rates, higher savings rates and lower fees. Credit unions require membership based on a common bond, such as employer, location, school, or association, though many now make membership easy to obtain.
Costs and rates
The National Credit Union Administration reports that credit unions generally pay higher savings rates and charge lower loan rates. In recent years, average auto loan rates were about 1 to 2 percentage points lower at credit unions, and credit card rates have a legal cap of 18% for federal credit unions. Many credit unions have lower or no minimum balances and fewer fees on checking accounts. Big banks may offer promotions and larger sign up bonuses.
Insurance
Both are protected up to $250,000 per depositor, per institution, per ownership category. Banks are insured by the FDIC and credit unions by the NCUA’s National Credit Union Share Insurance Fund. Both are backed by the full faith and credit of the US government.
Access and technology
Large banks like Chase, Bank of America and Wells Fargo have thousands of branches and ATMs and polished apps. Many credit unions join shared branching and ATM networks such as CO-OP, giving access to about 30,000 ATMs and over 5,000 shared branches. Smaller credit unions can lag in apps, Zelle support or online features.
Services
Banks tend to offer a broader range of products including business banking, wealth management and international services. Credit unions focus on consumer products like checking, savings, auto and home loans, credit cards and personal loans. Some offer small dollar loans as alternatives to payday loans.
Numbers
The US has about 4,600 FDIC insured banks and about 4,700 federally insured credit unions. Credit unions serve over 135 million members, and hold about 7% of total deposits in the US financial system.
How to choose
- Compare checking fees, minimums and ATM access.
- Compare savings APYs and loan rates.
- Check whether you qualify for membership.
- Test the mobile app and customer service.
- Many people use both: a credit union for loans and a bank for travel or business needs.
Rates and member benefits
Credit unions often return profits to members through lower loan rates and higher savings rates. In recent NCUA data, the average rate on a 60 month new car loan at federal credit unions was about 1 point lower than at banks. Many credit unions cap fees and offer small-dollar loans with lower interest, such as the NCUA’s Payday Alternative Loans (PALs) with a maximum rate of 28 percent. Banks may have wider ATM networks and business banking options, while credit unions join shared branching networks. Credit union membership requires meeting eligibility rules, and sometimes a small deposit of 5 to 25 USD opens a share account.
Based on data from the NCUA and the FDIC
