You might be familiar with both credit unions and banks, but ever wonder how they truly differ from each other? Credit unions and banks can both help you open accounts, save money, and achieve your financial plans. But read on to compare the important differences between credit unions and banks, and which one could be your best choice.
Banks & Credit Unions: Their Purpose
The main difference between a bank and a credit union is that a bank is a for-profit financial institution, while a credit union is not-for-profit. Therefore, banks are driven primarily to make profits for their shareholders.
On the other hand, credit unions like APGFCU, are cooperatives. This means they are owned by their account holders (known as members), who have a common goal in the organization’s success.
Rather than paying back profits to shareholders like banks do, credit unions pass along earnings to members in the form of higher dividends on deposits, lower and fewer fees, and reduced rates on loans and credit cards. Plus, members can weigh in on important decisions that shape the future of the credit union.
As a not-for-profit, APGFCU is here to focus on you. Members have access to products and services to help meet all of their financial needs, such as purchasing a home, building a business, and saving for the future.
Member-Centric Focus
At credit unions, your voice matters. Regardless of how much money you have on deposit, each member has an equal vote in electing the voluntary board members for the organization. As a member, your best interests guide every product we offer and every decision we make.
As not-for-profit organizations, credit unions’ complete attention goes toward helping their members achieve financial wellness. At for-profit financial institutions, you may not experience the same appreciation or value as being a credit union member-owner.
Product Variety
Choosing a bank or a credit union won't limit what’s available to you as far as handling your finances.
Credit unions pride themselves on top-notch customer service, striving to give personal attention to each member and taking great care to ensure satisfaction. Many, like APGFCU, also provide free resources in the form of financial education covering a variety of topics for your financial well-being.
Competitive Rates & Low Fees
Banks and credit unions both make money from lending funds at higher interest rates than they pay out on deposits, and through fees.
However, credit unions typically offer better rates and lower fees because the focus is on returning profits to members, rather than outside investors.1 Being not-for-profit makes credit unions exempt from some of the taxes banks have to pay.2
Check out APGFCU’s account rates to compare which is the best option for you.
Security of Banks & Credit Unions
Both banks and credit unions offer the same levels of deposit insurance – up to $250,000, guaranteed and backed by the federal government.3 Banks are insured by the Federal Deposit Insurance Corporation (FDIC). Credit unions belong to the National Credit Union Administration (NCUA), which is comparable to the FDIC for banks.
Proudly Local, Just Like You!
Credit unions are typically focused on the community in which they reside. This is because credit unions share a common bond for membership, such as living or working in the same area. Credit unions play a vital role in enhancing the quality of life in their communities by not only providing crucial financial support but also actively engaging in volunteerism, exemplifying their commitment to making the places they serve better and more resilient.
APGFCU also keeps in mind the youngest community members by offering youth membership savings accounts for ages birth to 18, with benefits progressing as members grow.
The ultimate goal is to improve the lives of all people throughout the community. As an example, click below to read about APGFCU’s donation that supported the construction of a new baseball complex for differently abled children in Harford County.
APGFCU Helps Give Children With Disabilities a Chance to Play Baseball
This article has been provided for educational purposes only and is not intended to replace the advice of a loan representative or financial advisor. The examples provided within the article are for examples only and may not apply to your situation. Since every situation is different, we recommend speaking to a loan representative or financial advisor regarding your specific needs.
1https://mycreditunion.gov/about-credit-unions/credit-union-different-than-a-bank
2https://www.nafcu.org/cutaxexemption/background
3https://ncua.gov/support-services/share-insurance-fund