Credit unions and banks share many of the same services. You can open saving accounts, checking accounts, get loans or credit cards and do pretty much all the same things with both of them.
So if they both offer all the same things, why does it matter which one you choose? While both credit unions and banks offer the same services, that does not necessarily mean they are equal. One may be better for you then the other.
So how do you figure out whether or not a credit union is it right for you? Let’s look into the pros and cons of both credit unions and banks and see which fits your situation better.
1: A credit union is typically a non profit organization, whereas banks are a business like any other. A credit union is a financial cooperative. What this means is that credit unions do not worry as much about making a profit as banks do. This translates into lower fees for you and better savings. Because of this, the interest rates and fees will almost always be better with a credit union.
2: Since credit unions are non profit organizations, if they make more money then they need to operate they will often pass that back to their customers, giving you a greater benefit if your credit union is doing well. They’re also more member-oriented. A credit union may qualify you for a loan when a chartered bank won’t.
3: The dreaded overdraft fee is something we all have dealt with at one point or another. But with credit unions, their overdraft fees are ten to fifteen dollars cheaper than a bank’s overdraft fee. This difference is also shared in other fees such as late payments or NSF fees.
1: Finding out if a credit union is it right for you also requires you to look into the cons as well as the pros, and one of the major cons is that using ATMs can cost a fair bit. Credit unions may have lower payments on other aspects, but they often charge high fees for using an ATM, particularly if the ATM is outside the Exchange Network. If you are someone who uses an ATM regularly, you’ll need to pay attention to this.
2: The requirements to open an account at a bank are typically quite low, in most cases they only require you to be above a certain age. And even then that is often bypassed by having a guardian co-sign with you. Credit unions are often far more strict, having a variety of requirements you must meet in order to join. If you do not meet these requirements, it does not matter if a credit union is it right for you, you wont be able to use it. For example, in British Columbia, most credit unions have a minimum credit score requirement.
3: Credit unions are usually very local. Most of them don’t have branches nationally, let alone internationally. If you move to a different province or country, you may not be able to use your credit union accounts, or it could be more of a hassle to do so.
Banks and credit unions are both great choices, and it’s possible to try out both. Everyone values different things in a financial institution, so deciding which to go with is a personal decision.
If you’re working internationally or traveling a lot, a bank may be a better option. if you want to be engaged in your local community, or interest rates are important to you, then a credit union is probably a better choice.