• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Credit unions

A credit union is a not-for-profit financial institution owned by its members (like you). Since credit unions don't need to show a profit, their sole purpose is to offer their members the best rates possible.

Credit unions are smaller than banks and limit membership to certain groups of people. They might all be employees of the same company, followers of a specific religion, residents in a certain geographic location or members of a civic organization.

As a member, you can vote on your credit union’s policies and influence how it is run.

Pros of credit unions

Favorable interest rates. Since credit unions aren’t designed to make a profit, they typically offer higher interest rates on deposits and lower rates on loans.

Lower or no fees. The nonprofit nature of credit unions allows them to keep fees as low as possible. For example, unlike banks, many credit union checking accounts have no minimum balance requirements or monthly maintenance fees.

Better customer service. Credit unions prioritize community and personal attention. Since policies are voted on by members, you’re more likely to receive services tailored to your needs. You can also develop a personal relationship with branch managers and loan decision-makers, which may help you secure a loan.

Security. Credit union accounts are insured up to $250,000 by the National Credit Union Administration. If you need higher coverage limits, you can often open multiple accounts.

Cons of credit unions

Outdated technology. Since the goal of credit unions is to charge you as little money as possible, they may have less of a budget to roll out new apps and technology. That said, if you find one that offers the basic online services you use the most, you may not need all the latest bells and whistles.

Limited locations. Credit unions are smaller and more focused on a tight-knit community. That means there are naturally fewer branches and ATM locations. To solve this problem, many credit unions have joined forces to create the CO-OP Shared Branch and ATM network that allows members to use branches and ATMs from all other credit unions in the co-op nationwide.

Limited membership. Each credit union has specific membership eligibility requirements called a “field of membership.” For example, the Navy Federal Credit Union accepts current and retired members of the armed forces, their families, household members and Department of Defense personnel.

That said, nowadays larger national credit unions only require you to be part of certain easy-to-join organizations. For example, to join Alliant Credit Union, all you have to do is become a member of Foster Care for Success by donating $5, which can be reimbursed.

Limited financial products. Most credit unions offer checking accounts, savings accounts, CDs, basic credit cards and various loans. But they don’t typically offer the wide array of financial products you find at banks.

Discover banking made refreshingly simple with Chime

Say goodbye to hidden fees and hello to no overdraft, no minimum balance, and no monthly fees. Get paid up to two days early with direct deposit. Join millions who trust Chime for easy, fee-free banking

Sign up today and start saving


Banks are for-profit organizations owned by investors. The main goal of a bank is to make money for the investors — and unlike with a credit union, you’re not a bank "member," which means you have no say in bank policies.

Banks don’t restrict eligibility to certain groups of people. Anyone who lives in a bank's serviceable area can open an account and become a customer.

Banks can be broken down into online-only operations and brick-and-mortar institutions. Online banks are completely virtual and have few or no physical locations. While they can’t offer face-to-face service like brick-and-mortar banks, their lower overhead typically allows them to offer better rates.

More: 10 best banks of 2023

Pros of banks

More accessibility. Big banks offer more branches and ATMs than credit unions. For example, Chase has more than 4,700 branches and 16,000 ATMs — making it more convenient to access your money wherever you are. And while some small regional banks require you to live in the same state, most banks don’t have special eligibility requirements to join.

More financial products. Banks are more likely to offer money market accounts, investment accounts, wealth management services and a wider range of credit card options.

Better technology. Banks have more funds to invest in fancy websites, convenient apps and other tech to make your life easier. Just remember, the money to develop this technology comes out of your pocket via higher fees and less favorable rates.

Security. Bank accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). For higher coverage, you can split your funds between multiple accounts.

Cons of banks

Higher fees. Since a bank’s main objective is to make money for its investors, they charge higher fees. For example, checking accounts often charge fees if you do not maintain a minimum balance in your account. Overdraft and bounced check fees are also often harsher in banks than credit unions — especially with non-premium accounts.

Worse rates. A bank’s for-profit objectives naturally lead to less favorable rates than credit unions. That said, you may find better rates at an online bank compared to a brick-and-mortar bank.

Less flexible. Banks have strict rules and protocols set nationally by a board of directors. This makes them less flexible than credit unions, where you have a say in the rules. This rigidity — paired with corporate, profit-focused policies — is a recipe for customer service issues.

Credit unions vs. banks

Is a bank right for you?

Banks make the most sense if you value convenience over price. You may pay more in fees and interest rates, but you have access to more financial products, better technology and more branches and ATMs.

If you take advantage and actually use all these extra features, depositing your money in a bank may be worth the price.

More: Open a high-interest bank account with Quontic

Choosing a credit union

Credit unions are designed to prioritize their members. If you want favorable interest rates, low fees, great customer service and an organization that has your best interests at heart, a credit union is the way to go.

This is especially true if you don’t need all the bells and whistles that banks offer.

Whether you decide to stay with your current financial institution or not, just be sure you’re regularly exploring your options to ensure you've landed on the best fit for your needs and financial goals.


Follow These Steps Once Your Portfolio Reaches $100K

If you've amassed a $100k+ portfolio, it's time to meet with a trusted advisor.Zoe Financial's elite network of fiduciary advisors offers personalized strategies to enhance your financial success. Experience exclusive investment opportunities and bespoke wealth management services. Trust Zoe Financial for unparalleled expertise and a commitment to your prosperity.

Mitchell Glass Freelance Contributor

Mitchell is a freelance contributor to Moneywise.com.

Explore the latest articles

10 best banks of 2023

The best banks offer competitive yields on deposits, low fees, excellent customer service and more.

Casey Bond Freelance Contributor


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.