Differences Between Banks And Credit Unions
- Author Christopher Boulanger
- Published April 21, 2012
- Word count 843
Although many people interchange the use of the terms banks and credit unions, these two institutions have certain differences.
Their Goals & Their Structure
A bank is more often a community, regional or even national or international business corporation that is for profit. It is either privately owned or publicly owned by investors and governed by a board of directors that are chosen by the stockholders while a credit union is in most cases a not-for-profit financial cooperative. It is owned by its members and governed by a board of directors which is elected from the members and by the members. There is also a common bond among the members of a credit union such as being workers in the same organization or belonging to a common geographical area. The credit unions use their members’ deposits to make loans that are short-term. These deposits are buying of shares of the union. Another difference between banks and credit unions is that the terminology used also differs slightly. In banks, term for its members is account holders but in credit unions, there are no account holders but just members. Even the services offered and the extent of the loan amounts might differ from banks and credit unions.
Services & Technology
Because banks are for profit business ventures, banks have the responsibility to return their profits to the stockholders and to do this they have to charge higher fees and interest rates in order to have higher profits. This is unlike credit unions which are not for profit and so have lower interest rates and fees because they do not necessarily have to make profits. However, because banks have to make profits, in order to attract a higher number of customers, they have to be innovative in their services and products which are different from credit unions. The credit unions lag a little behind in incorporating innovativeness and technology. This makes banks much better when it comes to the products and services. An example of this is ATMs: most banks have a large network of ATMs for letting make withdrawals and deposits almost anywhere. In contrast, credit unions will usually have few ATMs beyond a limited area.
Banks have also been more aggressive about creating online tools. It is possible for many people to do all their banking online without ever entering a branch. Bank websites and mobile applications have made banking more convenient and responsive for many people. But this is not the case with credit unions. Many credit unions have not embraced online banking and few offer strong online tools in comparison to banks.
Who Can Join?
The rules that surround credit union membership have relaxed over the last decade with more outsiders or other community members being admissible into the unions. But this still cannot be compared with the ease of joining a normal bank. Banks tend to take anyone with money and a decent credit history, but credit unions may still be governed by rules limiting their membership to certain professions or particular interest groups.
What Can You Get?
Even small banks are usually much larger institutions than credit unions and so can employ economies of scale when offering services to customers. A bank will likely be able to offer you larger loans and other financial products in addition to savings and checking accounts. They will also have more expertise to offer you with regard to taxes and accounting. Many banks have book-keeping services and will handle things like change for businesses.
While credit unions may not offer all the bells and whistles of a big bank, they do have some advantages. Because they are usually focused on a particular area or constituency, they often have services and options more tailored to their audience. You will find that credit unions offer better interest rates and discounts to certain people (e.g. teachers) and that they tend to be more flexible with their rules. Basically, in exchange for a smaller set of services, you get a more personal relationship than you’d get from a big. If you are a small business owner of regular guy looking for an auto loan, then a credit union may be your best bet.
A Lot in Common
Most people find that the differences between banks and credit unions are not a big deal. The truth is that the majority of your banking will be identical regardless of which type of institution you choose. Everyone needs to make deposits, order checks, and make withdrawals; and you will find no real difference in how you do things at banks versus credit unions.
When the Differences Matter
The differences really come down to scale and complexity. If you travel a lot, need a lot of different financial products or expect to need access to large loans, then you should look at a bank. If you have want a lower interest rate on small loans and more flexible terms then look at a credit union. Last, if you want to give more to your community then a credit union is your best.
Bradford Exchange Checks focuses on the selling of personal and business checks at deep discounts versus banks. We also believe in helping people save money anyway they can. You can save if you order checks online, but you can also find big savings by carefully managing your spending and understanding how you spend money.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- The Road to Sobriety: Understanding Substance Use Disorders
- MotorKote Ultimate 40/60 Synthetic Hyper Mix 5W-30
- Exploring Denver on a Dime: A Frugal Travel Guide
- Top 10 Ways Production Scheduling in Business Central Transforms Manufacturing
- Strength Training and it's Incredible Benefits for Fat Burning
- Enhancing Home Security with Aluminum Shutters: A Focus on Weatherwell Elite
- 5 Easy Ways to Make Oral Hygiene Fun for the Whole Family
- Transforming Plastic Extrusion Machines into Recycling Powerhouses
- Unraveling the Potential of Plastic Extrusion Machines
- The Rise of Plastic Recycling Machines: A Step Towards Sustainability
- Strawberry Cheesecake Ice Cream: OMG! Unreal!
- The Advantages of Using Professional Home Cleaners in Ilford
- 8 Compelling Reasons to Hire Professional Home Cleaners
- The 12 Steps Narcotics Anonymous Program To Recovery
- Send Money to Tanzania: Effortless Transfers with SafariRemit
- Stylish Savings: 10 Frugal Ways to Stay Fashionable in 2024
- Fly Cheap With FlightPapa To Any City
- How Collaborating with a Software Development Company Can Propel Your Business Forward
- A Comprehensive Guide to Choosing the Best Hair Transplant Method
- 15 Frugal Tips for a Memorable Wedding Day
- Credit Union vs. Bank
- Explore the Advantages of Renewable Energy: Wind, Solar, Biomass, Hydropower and Geothermal Energy
- Frugal Nutrition: How to Eat Healthy on a Budget
- Fintechzoom Richard Mille
- Who owns the most Bitcoin?
- Fintechzoom IBM Stock: Powerful!
- Building a Professional Website on a Budget: Using Free Tools like WordPress and AI
- Navigating Vietnam's Tourist Immigration: Challenges and Solutions
- Bitcoin FintechZoom
- Cost-Effective Gardening: Tips for Enhancing Your Garden on a Budget