A savings account is important to everyone because we have to deposit it into a financial institution to be able to save it. The question now is how to make the decision on where to save it. Should it be in a commercial bank or a credit union? You have to make a choice before registering for an account. The main aim of this article is to show you the Advantages and Disadvantages of a Credit Union and a Commercial Bank.
Thinking about your saving your money and applying for a loan comes with so many business considerations. It can be the pros or cons of the bank and the credit union. But wait; between Credit Unions and Banks, which one is the best for your savings account or loan? Let’s discuss this together and come to a conclusion.
If you’re tired of spending a lot of money to pay transactional charges (withdrawal and deposit) at the ATM or for your savings account, then you might want to look for a new bank. If you are on this path, you can consider applying for credit unions. Why so? It simply because of some several positive reasons.
First, they tend to offer higher rates of interest return on savings accounts and lower interest rates repayments on loans. Secondly, they’re also an increasingly wonderful choice among former bank customers interested in exploring new possibility. There’s already a January 2019 report online seen on the Credit Union National Association portal, that more than 118 million Americans currently have an account. They even use about 5,700 different types of credit unions across the country.
What Is a Credit Union?
In simple terms, a credit union is a type of financial institution similar to a commercial bank. It is a co-owned membership nonprofit financial cooperative. Presently, federally insured credit unions hold about $1.45 trillion in assets. They also have up to 30,000 ATMs in different local communities across the country. But they are usually smaller than conventional banks, making it easier to have a personal and comfortable experience. In the second place, an average commercial bank has about triple size of a community credit union. But unlike banks, they are nonprofits governed by their members, many of whom volunteer to serve as board members, committee members or in other roles.
Conversely, a credit union operates much like a bank as well as offer many of the same services. Take for instance, you can get a checking account with a debit card and a savings account. More importantly, you can also invest in CDs (certificate of deposit) and an IRA (Individual Retirement Accounts). Consequently, you can apply and get a car loan, a mortgage, a home equity loan, a credit card and other types of loans through credit union services.
Equally important, there sometimes is different confusion over credit unions overflow. A lot of people are unfamiliar with this type of banking. They falsely believe that they must belong to the military or work for the government to join them. Some even think that their savings will not be insured the same way they are in commercial bank savings accounts. But they are wrong. See reasons below;
Advantages / Pros of credit unions:
- First of all, they have less rigid eligibility requirements.
- Secondly, they also have lower interest rates.
- All financial deposits are insured in the same way as banks.
- They have much more greater financial literacy resources.
Disadvantages / Cons of credit unions:
- Credit unions have limited financial product offerings.
- They also do not have many physical branches.
What is the Biggest Difference Between a Bank and Credit Union?
The main difference between a bank and a credit union is that a bank is a for-profit financial institution, while a credit union is a nonprofit. The main financial services a credit union offers – including loans, checking accounts and savings accounts – are also available with traditional banks.
Advantages / Pros of banks:
- Resourceful online apps, tools and features.
- Added convenience.
Disadvantages / Cons of banks:
- It has rigorous registration requirements.
- They have much higher interest rates and transaction fees.
Written above are the few things you need to know about credit unions versus traditional banks. We were able to add the benefits and drawbacks of each financial institution. Choosing the best option for yourself is paramount. But choose wisely.
Similar Topics of Credit Unions
- pros and cons of banks
- credit unions vs banks
- what is one advantage of a bank over a credit union?
- similarities between banks and credit unions
- how do credit unions make money
- are credit unions fdic insured
- cons of credit unions
- credit union or bank for savings account
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