There is an ongoing debate about whether credit unions are better than banks or vice versa. If you are looking for a financial institution that you can trust, you will be surprised to find that both offer significant advantages once you understand their facilities.
Although banks are the first choice for any financial service or facility, credit unions also have unique advantages.
Credit unions are a relatively new concept, but their commitment to reliable financial services makes them highly trusted.
California residents planning to open checking accounts in Tulare County must know the differences between banks and credit unions before deciding which suits their needs. Once you have all the essential information about these entities, making the decision will be easy.
Banks vs. Credit Unions: What Are the Differences
Banks and credit unions have several differences and similarities. However, their general services are the same. They offer various loan options, enable you to use savings and checking accounts at different rates of return, and offer several other credit facilities.
So, if you are looking for a reliable financial institution, banks and credit unions can help.
However, there are some differences between the two in terms of fees, interest rates, convenience of use, customer service, and ownership. Let’s discuss them in detail below.
Credit Unions: Unique Characteristics
Here’s how credit unions differ from banks:
- Credit unions are not-for-profit organizations owned by their members. They offer services like loans, checking and savings accounts, and investment accounts like Individual Retirement Accounts (IRAs). Deposits up to $250,000 are federally insured by the National Credit Union Administration (NCUA).
- Credit union members hold the power to form policies through voting and participation in decision-making.
- The most noteworthy aspect of credit unions is that the profit generated is returned to customers via lower rates of interest and higher returns on savings.
- Credit unions were created to provide limited financial facilities to individuals in a medium income bracket. As a result, credit unions are exempt from federal income taxes. However, as time passed, their services started expanding.
Banks: Unique Characteristics
Here’s what banks offer:
- Commercial banks are generally owned by investors and are focused on profit-making. However, they offer open membership, meaning anyone can open an account in a bank. On the other hand, in credit unions, you must become a member if you want to open an account.
- Like credit unions, bank deposits are federally insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.
- Another advantage of banks is their accessibility. If you prefer dealing with your finances physically, banks are a great option because they have branches everywhere and can be accessed easily. However, a key drawback of banks is that their charges are very high compared to credit unions, which can hinder your financial goals.
Finding Out The Better Service Provider
The answer to this question is not straightforward. Yes, credit unions are superior to banks in some aspects. However, this is primarily because they are member-owned institutions and are not profit-oriented.
If you are a credit union member, opening a checking account means receiving many rewards and perks. Moreover, as a credit union member, you have the power to take part in crucial decision-making processes, making it an institution solely created for the benefit of its members.
Banks are reliable financial institutions, too, but their fees and other charges are comparatively higher. However, banks are more accessible because their physical branches operate at many locations.
The decision boils down to convenience and preferences. If you are looking for a solution that allows you to save money, opening a checking account with a credit union is a good choice.
But if you want accessibility and convenience, a bank is a better choice. Either way, you must know that your money is safe in both institutions, and the answer is just a matter of personal preference and accessibility.
