When finding a financial institution, you want to make sure it’s a place you trust, fits your needs, and serves your core values. While some choose to store money in a jar or coffee cup at home, most look to credit unions and banks. This is because there’s an opportunity for financial growth, financial literacy, and lending solutions.
Both offer financial products such as checking and savings accounts, personal loans, and digital services. Both institutions also offer financial security to ensure consumers' funds are safe, but credit unions and banks differ in more ways than you think.
We’re going to give you an honest, unbiased, look at the difference between credit unions and banks to help you determine which is best for your banking needs.
Credit unions are not-for-profit organizations built to serve and benefit their members. Anyone can join a credit union as long as you’re within the field of membership. Once you join, you become a member and part-owner of a credit union. Members get to vote and elect a board of directors to manage the credit union.
Banks are for-profit organizations, owned by investors and make a profit for their investors. Anyone including companies can open an account at a bank. Once you open an account at the bank, you’re a customer.
QUICK TIP: Since credit unions exist to benefit their members, they can offer higher interest rates on savings accounts, including CDs (Certificate of Deposit), and lower rates on loans. |
Psst... Lending solutions may vary between credit unions and banks. |
Both banks and credit unions are protected. Credit unions are regulated by the National Credit Union Administration (NCUA), where they pay insured deposits to the member owning the account up to $250,000. Banks are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC insures customers' accounts up to $250,000.
Here's a look at the accounts that are insured by FDIC and NCUA between credit unions and banks
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Skyla is regulated by NCUA and is federally insured by the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF is backed by the full faith and credit of the U.S. government. The NCUSIF insures each depositor up to $250,000.
Skyla takes it one step further. For those customers with higher deposits, Skyla has an additional $250,000 deposit insurance through Excess Share Insurance Corporation (ESI). This means your deposits are insured up to $500,000 at no additional cost to you. Learn more here!
Both banks and credit unions offer perks and benefits. Aside from high-interest rates on savings, favorable rates on loans, and less fees, credit unions offer discounts within their community.
Take Skyla's, for example:
● Military & First Responder discounts
● Trustage Health Insurance
● Access Skyla Credit Union's Amphitheatre's Fast Lane
● Customer Loyalty Discounts
Banks offer cashback rewards programs for incentives like using their credit card instead of a debit card or when you use their mobile app to redeem points at certain stores.
Credit unions give back by supporting important charitable organizations. In addition, profits are returned to the members - instilling a similar set of values as other credit unions - which enriches the community.
While banks do many things, their primary goal is accepting deposits.
Skyla makes banking personal and is dedicated to partnering with and supporting the local community through annual scholarship awards, financial contributions to local organizations and initiatives, and simple business financing for community growth and revitalization.
Check out how we are enabling enriching and encouraging the lives of the community in which we serve.
Credit unions typically have better approval odds for a loan due to bad or no credit at all. This is because loan officers review more than a credit score when members submit a loan request. Loan officers know their members are more than just a number - they're valued members! So loan officers review a variety of factors when reviewing your application. Factors include your income, the relationship you have with the credit union, your previous loans, and more.
Check out our flexible loan options that'll fit your lifestyle here.
Remember, credit unions are not-for-profit organizations that serve you. They are member-owned meaning, the member is part owner of the credit union.
Banks are for-profit organizations, owned by investors and make a profit for their investors. Anyone including companies can open an account at a bank.
When deciding between the two types of financial institutions, it's not always easy peasy. Do some research and ask the following questions when determining a financial organization to trust.
Take a moment and reflect on what's important to you when it comes to your money. If you're thinking of joining a credit union and want to learn more about how to become a member and what membership entails, I've created that article for you here.