If you’ve ever searched for low bank fees, best checking accounts, or where to get a car loan, you’ve likely seen a familiar term in the results: credit union.
At first glance, banks and credit unions seem to offer the same services. So what is the difference between a credit union and a bank?
The answer comes down to ownership, and that difference can affect everything from rates and fees to the way financial decisions are made.
What does that mean?
Unlike banks, which are owned by shareholders and focused on maximizing profit, credit unions are owned by their members—that means you. Every person who opens an account is a part-owner, not just a customer.
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Credit Union |
Bank |
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Owned by the people who use its products and services (members). |
Shareholders |
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Not-for-profit cooperative structure. |
For-Service |
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Earnings returned to members through better rates and lower fees |
Profits paid to shareholders. |
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Members democratically elect a Board of Directors. |
Led by shareholders who collect the bank's profits. |
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Broad Community Focus |
Local Community Focus |
This member-first approach results in:
- Lower loan rates
- Higher savings returns
- Fewer fees
- Personalized financial guidance
Credit Union vs. Bank: A Quick Answer
The biggest difference between a credit union and a bank is ownership.
Banks are owned by shareholders and operate for profit. Credit unions are owned by their members and operate as not-for-profit financial cooperatives.
Because of that structure, credit unions often return earnings to members through lower fees, competitive loan rates and higher savings returns.
Do Credit Unions Offer the Same Services as Banks?
Most consumers won't notice much difference in the products themselves. Banks and credit unions both offer checking accounts, savings accounts, loans, credit cards and retirement accounts.
The bigger difference is how those products are delivered and who benefits from the institution's success.
Can Anyone Join a Credit Union?
The simple answer is, yes, anyone can join a credit union. While credit unions require eligibility, many community credit unions like Veridian offer accessible eligibility requirements.
In our earliest days, back in the 1930s, our field of membership was John Deere employees and their families.
Today, our field of membership includes residents of Iowa, Nebraska and Minnesota. But anyone around the country can become eligible for membership by donating $5 to Habitat for Humanity of Iowa when they apply.
Check it out: see the benefits of membership at Veridian Credit Union.
The Benefits of Joining a Credit Union
The cooperative structure comes with many benefits that you may not see at a bank.
Better Rates and Lower Fees
Since credit unions are cooperatively owned by members, earnings are returned to you. This allows credit unions to offer lower fees and better rates on accounts and loans.
An Emphasis on Community
Community has always been a major part of the credit union movement. Credit unions are formed by communities who pool their money together and create the financial products and services they all need.
At Veridian, for example, we go beyond simply donating to important causes. You’ll find us out and about, sponsoring events that provide family fun and lift up our communities.
Personalized Service
Many credit unions, including Veridian, are available nationwide. But since most of them have a local or regional focus, they can personalize their products and services to the people in their communities.
Plus, the people that work at credit unions are just like you. They are members of your community and want you all to succeed.
Your Money is Safe
Maybe you’ve heard that little statement at the end of bank commercials: “Federally insured by FDIC”.
Credit union members are federally insured as well. The National Credit Union Administration (NCUA) insures every member up to $250,000 per depositor.
So, whether your money is in a savings account or a certificate of deposit (CD), you can rest assured that your money is safe.
You Have a Voice
As a credit union member, you have the opportunity to vote for board members to govern the credit union. In other words, you have a say in the decisions being made at the highest level of the credit union.
You can also run to serve on the board of directors at your credit union. When you serve on the board of directors, you get to be in the room and be a part of the final say when big decisions are made.
FAQ About Credit Unions
Can anyone join a credit union?
Yes, anyone can join a credit union. Many credit unions offer accessible eligibility requirements.
Are credit unions federally insured?
Yes! Similarly to how banks are federally insured by FDIC, credit union members are federally insured by NCUA. The NCUA covers up to $250,000 per depositor, per credit union.
What does the cooperative structure mean for me?
At credit unions, the members are the owners and shareholders. So, the earnings are returned to you in the form of better rates and lower fees. Also, you’ll have the opportunity to elect board members to make the right decisions for the credit union on your behalf.
Final Thoughts: Get More from Your Credit Union
Banks and credit unions offer many similar products and services. But the structure of each type of financial institution is what sets them apart.
If you’re ready to experience the credit union difference, check out Veridian Credit Union today. You can join online in minutes.
