When I turned 15, I opened a savings account at the local credit union of my smallish hometown because I had started working and earning money and needed a place to keep it that didn’t involve a jar in my bedroom. My parents had accounts at the credit union, so that settled it.
A few years later when I left the nest to attend Western, I opened an account at a bank simply because I was unfamiliar with Kalamazoo (the “Big City”, as my parents still jokingly refer to it to this day) and the branch location was extremely convenient to campus. Months later when my freshman year was completed, I happily closed down the bank account before moving back home for the summer because I could never get the account to balance no matter how many times I balanced my checkbook and pored over my receipts and statements. I’m sure there may have been some weird fees in there that I wasn’t noticing, but after a while, I gave up trying to figure it out and my trust in the bank was pretty much non-existent.
When I returned to Kalamazoo for my sophomore year, I needed to find a new home for my money. My mom said to stick with credit unions (“They’re just better,” she reasoned), and lo and behold, an ECCU branch was right around the corner from my apartment. I’ve been a member ever since.
So there you have it, everyone: the difference between credit unions and banks. Just kidding.
But seriously….how are credit unions different than banks?
A quick search in Google of “credit unions vs banks” turns up roughly 16 million results. It’s also one of the top searched phrases when it comes to banking in general. With the bad press many of the big banks have received in recent years, it’s no wonder people are curious. If my explanation above wasn’t enough to educate you on the differences between credit unions and banks, consider these 6 reasons instead:
- Credit Unions Are Not-For-Profit. Do we make a profit? Yes (well, hopefully). But it’s what credit unions do with that profit that differentiates them from banks. Credit union profits benefit all members in the form lower loan rates, high savings yields, and annual dividends. They are reinvested in ways that directly benefit the member.
- Credit Unions Typically Have Lower Fees. This is another benefit of being not-for-profit. It doesn’t mean that credit unions don’t charge fees – we all do – it just means that when you compare credit union fees against a bank or other for-profit financial institution, they’re more than likely to be lower and less in quantity. No one likes fees, but the good news is, at ECCU most of them are pretty easy to avoid.
- Credit Unions Are Owned By Their Members. Are you a member of a credit union? Congratulations, you’re a member and owner! Notice that I said “member”? It’s because you’re more than a customer at a credit union. You are part of an organization where you can vote on the board members to be elected who will best represent your voice and provide direction for the credit union as a whole. And luckily, it’s easier than ever to become an ECCU member.
- Credit Unions Exist To Help People. The shared social purpose of all credit unions is “People Helping People.” Every member counts, and it doesn’t stop there. Credit unions tend to be heavily involved in community activities, charities and other community-centric events. See some of ECCU’s community-supporting endeavors here and in our newsroom.
- Many Credit Unions Offer The Same Products and Services As Banks. While this may not be true for some smaller credit unions, a large majority of credit unions, including ECCU, can stand toe-to-toe with a bank’s product and services list. And our state-of-the-art technology upgrade coming this summer will make us as technologically advanced as any big bank. Get ready!
- The Credit Union Co-Op Network. When you join a CO-OP credit union, you have access to nearly 30,000 surcharge-free ATMs. ECCU is part of the CO-OP network, which also includes 7-Eleven locations. Additionally, ECCU partners with the Jeanie ATM Network, allowing members to make surcharge-free withdrawals, deposits, transfer and inquiries at any 5/3rd Bank ATM.
These aren’t all of the differences, but they certainly help paint the broader picture. The next time you hear someone ask what the difference between a credit union and bank is, share this post! They’ll think you’re so smart. And when you share the sources and recommended sites below, they’ll probably want your autograph.