Financial decisions are some of the most important choices in life. With all the talk of banks and credit unions and what one can do that the other can’t, we understand it’s frustrating and confusing. That’s why we’re exploring the differences between a bank and a credit union.
The main difference is that a bank is a for profit business while a credit union is a not-for-profit business. This means that the ultimate goal of a bank is to make money, while the ultimate goal of a credit union is to support their members. To do this, credit unions give back profits to their members in the form of higher interest rates and lower fees.
The difference in business models leads to another difference: membership. Banks are open to everyone, while credit unions are only open to members. That may sound exclusionary, but it’s easy to become a member of DECU! You just have to live or work in one of our 14 counties served or have a relative that’s a member. It’s as simple as that.
But why do credit unions require memberships? It’s because credit unions, unlike banks, are financial cooperatives. That can sound confusing, but basically it just means that we’re member owned. We work together and share profits, so everyone benefits.
Another difference is the insurance. Banks are insured by the FDIC while credit unions are insured by the NCUA. There’s a common myth that credit unions aren’t as safe as banks, but that’s completely false. Banks and credit unions have the same insurance, they are just provided by different groups.
Speaking of myths, it’s often said that credit unions are more limited in services than banks. This may depend on the credit union, but this is typically false as well (especially when it comes to DECU). Credit unions are just as invested in new technology as banks. And just as easy to access. With tons of no surcharge ATMs, multiple branches, online banking, live chat, and video banking, we think it’s pretty easy to get ahold of DECU. So, while the myth is out there, this is another area banks and credit unions are more similar than different.
Another huge difference is that credit unions are more community oriented. Banks are typically national, while credit unions are typically more local, like DECU. As a local institution, we want to give back to the community that keeps us running. We do this by sponsoring events, donating to charity organizations, and volunteering (did you know every DECU employee gets 16 hours of volunteer time to use wherever they want?). Banks are less likely to have that sense of community.
Last, credit unions are more likely to take a chance on you. If you’re someone with great credit, you know you can go anywhere and get a loan. If you’ve hit a rough patch and your credit isn’t as great as you’d like, credit unions are more likely to take a chance on you and help you get back on your feet. Credit unions also take the time to offer credit counseling and products that can help you build up your credit. At a bank, you tend to be just a number… another customer to get in and get out. At a credit union, you’re a member. You’re family, and we’ll treat you like that.