Credit Unions vs. Banks | Neighbors Federal Credit Union (2024)

FAQs

Are federal credit unions better than banks? ›

Credit unions tend to offer lower rates and fees as well as more personalized customer service. However, banks may offer more variety in loans and other financial products and may have larger networks that can make banking more convenient.

Credit unions are owned by their members, so members are usually the focus of the institution. This means that credit unions are generally known for providing better customer service than banks. Nonprofit structure means better rates and lower fees.

Credit Unions are the only democratically run financial institution. A federal credit union is member-owned and controlled.

Alliant Credit Union.

Alliant offers an above-average interest rate for savings. Membership is not restricted; you can join with a $5 donation to a nonprofit. Alliant's mobile app is highly rated, and members have fee-free access to an 80,000-ATM network.

Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.

People choose banks primarily because of the convenience of multiple branches across the country, along with better technology. On the flip side, people choose credit unions primarily because of discounted loan rates, higher interest rates and better customer service.

Credit unions offer checking and savings accounts with low or no minimum balance requirements. Keeping a minimum balance in an account can be stressful, especially when you're going through financial hardship, and many banks charge fees if the balance is too low.

First, bankers believe it is unfair that credit unions are exempt from federal taxation while the taxes that banks pay represent a significant fraction of their earnings—33 percent last year. Second, bankers believe that credit unions have been allowed to expand far beyond their original purpose.

Which is Safer, a Bank or a Credit Union? As long as you are banking at a federally insured institution, whether it is a credit union insured by the NCUA or a bank by the FDIC, your money is equally safe. Credit unions are owned by the members—your savings account at a credit union is a share of ownership.

Are credit unions safer than banks during a recession? ›

bank in a recession, the credit union is likely to fare a little better. Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money.

The main benefits of a credit union vs. a bank are that credit unions tend to offer better rates and customer service, lower fees, and a national network of ATMs.

Progressive Credit Union - You must be recommended by another member. This might be the most unique credit union requirement, and it also seems to be the toughest.

Navy Federal is the country's largest credit union with around $168.4 billion in total assets and 13.2 million customers at the end of 2022, according to the latest data from the NCUA.

Better interest rates: Credit unions typically offer higher interest rates on savings accounts because they have lower overhead costs than banks. Similarly, they offer lower interest rates on loans. Customer service: Credit unions pride themselves on offering better customer service than banks.