Credit Union vs Bank

At ABEFCU, we are proud of our tradition of providing exceptional service to our members for over 40 years, and we look forward to continuing to serve our members while we adhere to the Credit Union Philosophy of building trusted relationships through convenient, personalized banking.

We have found that not many people know all the differences between a credit union and a bank. There are some very important differences that create some great benefits to Credit Union Members!

What is a Credit Union?

A credit union is a cooperative, Not-for-Profit, financial institution, owned and operated by its members to meet their financial needs. A credit union serves members who share a common bond such as employment, education, social interest, location, or religion.  A credit union does three things:

    1. Encourages and helps members save regularly through payroll deduction and direct deposit.
    2. Lets members borrow funds at fair rates.
    3. Once expenses are paid and reserves are set aside, surplus earnings are returned to the members in the forms of higher dividends, lower loan rates and free or low-cost services.
    Here are some Key Differences between Credit Unions and Banks

    Feature Credit Union Bank
    Philosophy Not for profit, not for charity, but for service Are profit-oriented organizations
    Exist to earn a profit for stockholders
    Control/Management Member-elected, unpaid volunteers Shareholder-elected, paid directors
    Savings (share accounts) Regular and Money Market accounts, Certificates, and other plans available. Regular and Money Market accounts, Certificates, and other plans available.
    Checking (share draft) Most credit unions offer at least one of the following accounts: free checking, prime-time checking, or interest-bearing checking. Checking account types are similar, however more banks charge higher fees associated with their accounts than do credit unions
    Loans A wide variety of loan types including personal, auto, secured, home improvement, mortgage and credit cards.

    Loan consideration takes into account applicant’s character and capacity to repay. Loan rates generally lower than banks.

    A variety of loan types but banks traditionally are oriented toward commercial loans.

    Loan consideration usually based on applicants credit record and capacity to repay. Loan rates usually higher than credit union rates.

    Fees Credit union fees typically are fewer and lower than bank fees. Fees account for nearly one-third of banks’ total profits
    Safety Insured  to at least $250,000 by the NCUA, an agency of the federal government. Insured to at least $250,000 by the FDIC, an agency of the federal government.
    Support Credit unions are part of worldwide support networks that include credit union leagues, a national trade association (CUNA), shared branching and CO-OP ATM networks. They share ideas, information and resources. Most banks belong to state and national organizations. However, banks usually are reluctant to share ideas, information and resources with each other.

    If you are looking for a financial institution where you are more than a dollar sign, ABEFCU is a great choice. Because you are the owner, your voice is always heard, it is your interests that comes first, not big profits.