Bank vs. Credit Union

Accountancy Resources

Bank vs. Credit Union


When choosing where you want to conduct your personal banking one broad decision that you have to make is whether you want to use a bank or a credit union. While both provide the same key functions there are some major differences that can drive your choice on whether to use a bank vs. a credit union.

Credit Union

The biggest factor differentiating credit unions from banks is that they are not-for-profit organizations, so while they provide the same basic services they are not ultimately trying to make a profit off of those services.

Key advantages to using a credit union include:

  • Banking Fees: One area where banks try to make a lot of profit from users is through transaction and account fees. Credit unions typically have far lower fees than banks and in some transaction and account types, there may actually be no fees.
  • Loans & Credit Cards: Often credit unions offer lower interest rates on loans (i.e. a mortgage) and on credit cards that they issue. In the long run, this can save thousands of dollars over years of using the same credit union vs. having used a bank.
  • Deposits: Often credit unions offer higher interest rates on deposits that you hold with them, either through your basic account or through different investment tools.
  • Service: Many use credit unions because they often provide a higher level of customer service than banks. This is not always the case though so you do want to make sure you research online and through your social network before using a specific credit union.


After reading the advantages above it can be easy to think that credit unions are hands down better options for your personal banking. However, there are some key reasons why banks are so much bigger and have so many more customers nationally. Key advantages to using a bank include:

  • Number of Branches: Banks have far more branches than credit unions which make it far easier to actually visit your bank. Many credit unions may have a single branch or likely less than 10 in a relatively small geographical area. For individuals that travel this can be a major consideration. You also have to consider the implications if you may have to move for work, as your credit union likely doesn’t operate in another state or perhaps even county.
  • ATMs: Most credit unions do not have branded ATMs available, and if they do the number is fairly limited. This means that most of the time when you need to get money you’ll be using an out-of-network ATM that will incur transaction charges. Some credit unions offer reimbursement for transaction fees but this is often capped at a relatively low number of transactions. Banks with national networks of ATMs mean that you don’t incur these transaction fees every time you need cash.
  • Online Access: Depending on the credit union the online access can be very limited and even the best don’t typically rival the online services provided by big banks. For many individuals actually setting foot in a bank is something that may only happen a few times a year, with online banking taking over. That means that using a credit union may not work well for those that prefer to use online banking.
  • Scope of Services: Banks have really become a one-stop-shop for every kind of financial service you could need, ranging from investment tools to different types of insurance. Credit unions often have a smaller overall service offering so even when using a credit union you may need to then conduct other aspects of your personal finance elsewhere. This is a big advantage at many banks as bundling products and services can reduce your overall fees.

Bank vs. Credit Union

Ultimately you should consider the scale of your financial needs when determining which suits you better and which will result in lower costs to you. For low and middle-income individuals with few banking needs and who do not travel too much, a credit union can often be the best option. For those who need extensive banking services and who travel a lot, a bank is likely a better option.