Credit union vs. bank. They both offer checking accounts, loans, and savings opportunities, but which option best meets your family's financial and personal needs? That can vary significantly based on your preferences.

Before deciding whether you should select a credit union or bank, you want to think about what features are most important to you and compare what credit unions and banks have to offer.

Differences In Credit Unions vs. Banks

Here's a breakdown of the differences between these financial options to help you settle the credit union vs. bank debate.


The structure refers to how the bank or credit union operates.

Credit Union: A credit union is a not-for-profit organization. Therefore, it is member-owned, and each member acts as an investor. Credit unions don't operate with a profit-first agenda as many traditional businesses do. Consequently, you can expect to receive different benefits from using a credit union that puts your needs first.

Bank: A bank is a for-profit business. That's why fees can sometimes be higher and charged more regularly. They can also charge higher rates on loans and credit accounts.


One significant difference between banks and credit unions is account eligibility—how you qualify to take advantage of the products and services.

Credit Union: Credit Unions are member-based. You will need to join and become a member-owner to enjoy the rewards of a credit union. However, it's typically not difficult to obtain membership. Depending on the credit union, you could become a member based on where you live, work, worship, or go to school; your employer; community or organizations or associations you're part of; or even the fact that you have family members who have already joined. There can be a very small, one-time membership joining fee, but it’s usually just a few dollars or less.

Once you become a member, you have access to all that a credit union has to offer, and it's largely a lifetime membership. As a member, the organization will act with your interests in mind. That's one of the perks of being a part-owner.

Bank: There are no membership requirements to join a bank. Typically, you can utilize their products and services regardless of your location, career, organization affiliations, etc.

Dividend and Interest Rates

In some cases, you want a high-dividend rate, and in others, a low-interest rate will better serve you. Historically, you will find a difference between the interest rates offered at credit unions and banks.

Credit Union: The interest rate at a credit union is often the most favorable compared to other available options. If you want a savings account or other alternative to save your money, you’re more likely to benefit from a higher dividend rate. This higher deposit rate will help your money work harder for you, bringing you greater earnings.

However, if you want a credit card or loan of any kind, you’re more likely to qualify for a lower interest rate compared to your other options. Even if you are applying for your first vehicle or are trying to rebuild your credit, you could enjoy a much-reduced interest rate in comparison to a bank or other lender. By paying less in interest, you can save money over the length of your loan.

Bank: The interest rate at a bank will generally be higher for credit cards and loans, and lower for savings options. To qualify for a lower interest rate credit card or loan, you usually need to have a long, excellent credit history.

Customer Service

Finances are very personal, so you want to receive knowledgeable, individualized and personable service, whether you're at a credit union or bank.

Credit union: According to the 2017 American Customer Satisfaction Index Finance and Insurance Report, consumers rate credit unions with higher satisfaction than banks. In this report, 82 out of 100 credit union members were satisfied with their customer service experience.

This is a trend that you can expect across the board. Credit unions provide personal and more attentive member care. This could be due to the culture of a credit union, the fact that they're local to a member’s area, or the way those who work there are trained. Regardless of which of these reasons, the high level of member service is a major benefit.

Banks: On the other hand, the customer service ratings for banks fall shorter than credit unions by over 15%.


When possible, you want to save on fees. There are various ways to do so, and the type of financial institution you select could help you do just that.

Credit Union: Credit unions charge fewer fees across the board, and the fees they charge are lower. This could be due to their not-for-profit status and the fact that they want to save their members money. It is a much-appreciated benefit of banking at a credit union.

Bank: At a bank, you may pay higher fees. It is one of the ways that they increase their profits, so you can expect this to continue.

Credit Union vs. Bank: What's Best For Your Family?

Now that you have a better understanding of some of the differences between a credit union and a bank, hopefully, it’s easier for you to make a decision regarding which option is better for you and your family. Think about your preferences and values related to banking, and compare what credit unions and banks have to offer.

Ultimately, if you decide that a credit union is the better option for you, we invite you to check out what we provide our members at Fort Lee Federal Credit Union. We’re happy to help you manage your finances and meet your financial goals.

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