What is the Difference Between a Credit Union and a Bank?

When it comes to your money, you want to make the best decisions possible. One of the most important decisions you can make regarding your money is the type of institution you use to handle your financial matters. A bank is probably the first institution you think of when it comes to handling your money; however, there is another option that may work for you – a member-owned federal credit union.

What is the difference between a bank and a credit union? Here’s a look:

  • Credit unions are not-for-profit organizations that are run by their members, whereas banks are corporate institutions that make profits.
  • Both credit unions and banks accept deposits, offer loans, offer a variety of account options; however, the interest rates that credit unions are often higher than the interest rates offered by banks.
  • Both credit unions and banks are insured, but credit unions are insured by the National Share Insurance Fund (NCUA) whereas banks are insured by the FDIC. The NCUA is a government agency that is backed by the United States Government.

So, which is the right option for you; a bank or a credit union? Talk to a representative of both to find out.