Looking for a place to open a financial account? Your main choices are going to be either a bank or a credit union.
But why should you go with a Vermont credit union vs. a bank, or vice versa? What are the differences between the two? Let’s take a look!
Membership/ownership
Banks are owned by investors and are for-profit enterprises. This means banks are focused on turning profits for their investors so they can remain viable. Anyone can open an account with a bank (individuals or businesses), but those customers do not have any say in how the bank will be run.
Credit unions, on the other hand, are nonprofit organizations owned by their members. Credit unions do not need to make profits for their members, but instead are focused on keeping fees low and setting high interest rates on savings. However, credit unions must limit their customer base to geographic areas, companies, schools or organizational membership.
Products and capabilities
Banks offer personal and commercial accounts, credit cards and loans. They may also offer investment and savings vehicles like IRAs and money marketing accounts.
Credit unions typically do not offer as many products as banks, especially for commercial purposes, and will generally have fewer investment products.
Fees
Banks are required to make money for their investors, which means they’ll usually have higher fees. They might require minimum account balances, and will have higher fees for bounced checks or overdrafts, especially if you do not have a premium account.
Credit unions typically do not have minimum balance checking accounts or monthly service charges. Fees for banking errors are also usually lower than at banks.
Interest rates
You should always be sure to shop around with both banks and credit unions when looking to take out loans. You can probably get lower rates for online banks than brick and mortar banks, but in most cases, credit unions are going to provide the much better deal.
Credit unions typically have the lowest available rates for car loans and mortgages, and higher interest rates on savings products. This is one of the primary reasons people opt for credit unions—the rates simply cannot be beat in many cases.
Tech capabilities
The online services and tech capabilities of large banks tend to be more robust than those of credit unions, because they have more money to spend on that technology. They’re also more likely to rapidly upgrade their technical services as the technology advances.
This doesn’t mean credit unions won’t have online tech—they just don’t have anywhere near the same budget that larger banks do. There are, however, some credit unions with digital banking options that will have well-designed apps and online banking solutions for you to use. NEFCU is pleased to offer our members a rich digital banking experience including NEFCUOnline and the NEFCU mobile app that gives you access to your accounts 24 hours a day, seven days a week.
If you’re still not sure whether you should choose a credit union vs. a bank, why not call or visit us online to find out what we can offer? Staff at New England Federal Credit Union will be happy to talk to you about our offerings. We look forward to discussing your financial needs with you!