3. Consider interest rates

Checking accounts don’t usually pay interest. If you’re opening a savings account, CD, or money market account, you should look at how much you’ll earn in interest.

You may decide that a high interest rate isn’t an important factor when choosing a bank. Maybe you find a bank that doesn’t pay high rates, but you like it for other reasons.


Ownership and Membership

Banks are owned by investors and operate as for-profit institutions, and banks must make a profit for their investors. 

Anyone is eligible to open an account with a bank including individuals or companies. Customers do not have a vote or a say in how a bank is run, unlike a credit union, which has a membership. At a bank, you are a customer. At a credit union, you are a member.

Product Offerings

Banks offer both personal and commercial banking products, including business credit cards and business loans. Banks may offer investment and saving vehicles like Individual Retirement Accounts (IRAs), certificates of deposit, and money marketing accounts.

Interest Rates

When you're looking for a loan of any type, it’s always best to check both your local banks and credit unions. Online banks may offer lower rates than brick-and-mortar institutions with an online presence, but banks usually can't compete with credit unions in this arena.


Since banks must make money for their investors, they tend to have more and higher fees than credit unions. Free checking accounts at banks usually come with stipulations, such as minimum account balances or requirements for additional account types (like mortgages or credit cards). 

The fees for errors, such as a bounced check or overdrafts, tend to be higher at banks, too—especially if you don't qualify for a premium account. Again, when you're researching banking fees, it's important to compare both online banks with brick-and-mortar firms.

Online Services and Technology

Large banks tend to have more money to spend on technology, and as a result, they are known for adding technical services much more quickly than credit unions. Mobile banking services are likely to be far more advanced at banks. If technology and online banking are keys to your choice, make a list of your must-have services and ask for a demonstration of them before opening an account at a bank or credit union.



You should consider whether you need a financial institution with few or many locations. Also consider whether you work a considerable distance from your home. If so, is it more important for your depository institution to be located close to home or close to work? Or, do you want to be able to access locations both at home and at work? If location does not matter, consider if online banking is available. Use our find a state-chartered bank or credit union tool to get started.

Special Considerations

Accounts in banks and credit unions are insured up to $250,000. Banks are insured by the Federal Deposit Insurance Corp (FDIC), and credit unions are insured by the National Credit Union Administration.  

If you have more than $250,000 to deposit, talk with the customer service department at the institution you’ve chosen and inquire about the variety of account types you can use to increase your access to insurance. A checking account and a savings account, for example, will each qualify for insurance up to $250,000.

What Kind of Customer Service Can You Expect?

For better or for worse, once you choose a banking partner, you’ll be working with them toward your continued financial health. Before choosing a place to park your money, make sure the institution you select offers a level of service you can live with, time and time again.

In general, smaller institutions like community banks and credit unions will offer more personalized attention to clients and members.

Choosing the Best Option

It is important to make the best choice for your situation. Overall, a credit union will offer the best value as far as fees and interest rates go. However, the choice may be based on other factors like qualifying for a lower interest rate on a mortgage by opening an account at a specific bank. It is worth your time to consider all of the options in your area and it will only take a few minutes to review the options online. Be sure to pay attention to the fees and rules with each account you want to open. If you decide to switch banks, take the time to do it correctly. You will need to switch over your automatic payments and direct deposit before you close the first account.

Is Your Money Safer in a Credit Union or Bank?

Cybersecurity is a hot topic these days, and rightfully so. You can’t walk through a crowded room without meeting someone who’s had their bank account hacked. Cybercrime has resulted in $1.5 trillion stolen from hard-working, everyday people.1That’s equal to the GDP of Russia. Makes your head spin—and your stomach turn with anxiety.

No worries, though. Your money is equally safe in both credit unions and banks. The federal government requires financial institutions to pay back money stolen from your account if hackers breach their website.

If your PIN or debit card is stolen and somebody takes out money or spends money from your account, there are some guidelines about how much money you get back. That amount is based on how soon you report the theft. The sooner, the better, of course. This goes for both banks and credit unions.

Credit unions

Credit unions are owned by their members as not-for-profit organizations, which means people who use their financial services are more involved in credit union operations.

Pros of a credit union

  • Credit unions usually have the lowest interest rates on loans, which can be a great option for businesses planning to open a brick-and-mortar location.
  • For savings products, credit unions may provide higher interest rates than banks.
  • You’ll find a credit union usually doesn’t require a membership fee or monthly service charges.

Why Choose a Credit Union?

As a cooperative financial institution, a credit union puts its members first. This means credit unions are known for their excellent customer service. When a member goes into a credit union branch, they can generally expect to get personal attention and a commitment to getting their needs met. In addition, your membership to a credit union is good for life, even if you leave the organization or community served by the credit union.

Credit unions also provide their members with necessary financial education as part of their services. In addition to the types of online articles and tools that you can find on many banking websites, many credit unions also offer in-person seminars on important financial topics, such as managing credit cards, preventing identity theft, buying a home, planning for retirement or estate planning.

The biggest benefit to credit unions is financial. A Credit Union National Association (CUNA) report found that the average annual financial benefit for a single credit union member in 2018 was $85. For households, that benefit was $178.

So how does the average credit union member see such benefits? To start, any profits that the credit union sees will be distributed to its members in one of two ways: either by earning interest on their deposit accounts or by receiving dividend checks periodically.

In addition, the fact that credit unions are not-for-profit also means that they often have no minimum balance requirements, lower deposit requirements to open accounts and lower overdraft, non-sufficient fund and ATM fees. Finally, you are likely to receive lower interest rates on loans from a credit union, compared to a bank.

Pros and cons: Credit union vs. banks

Here's a closer look at some of the pros and cons of a credit union vs. bank so you can decide which is right for you.

Branch and ATM locations

If you prefer to do your banking in person, your bank’s branch locations will be an important consideration. Check to see if the bank or credit union you’re interested in has locations near your home or office to make banking more convenient for you. If you travel frequently, you may also want to consider whether there are branches in the cities you visit most.

And even if you don’t typically bank in person, find out where the bank’s ATMs are located. Don’t forget to see if there’s a fee for using an ATM that’s not in the branch’s network.


  • Credit unions are nonprofit organizations while banks are for-profit companies. Banks usually have more advanced online tools and larger branch networks, but credit unions win when it comes to interest rates and customer service.

  • A credit union is a better fit than a bank if you're looking for the most favorable interest rates and personalized customer support. They're also better options for those with fair or poor credit who may have difficulty getting approved at a bank.

  • A bank could be a better choice than a credit union if you prefer to manage your money online and want the best online tools. Banks will also appeal to those who regularly travel outside their local area and still want convenient access to branches and ATMs.

Small Banks

A small bank is more focused on customer service. You may choose a small regional bank or an even smaller local bank. These banks offer several accounts, but they may not be able to do as much as a larger bank. You may not be able to exchange foreign currency at a small bank, but your account does matter to them. Often the people you interact with do make the decisions regarding your account. The biggest downside is that you will have to change banks when you move. You will also have to use other ATMs when you travel. Be sure that your small bank is insured by the FDIC. Most are, but it is important to verify anytime you open a new account. 

  • Better customer service
  • More choices made at the branch level on loans and fees
  • Fewer branches which means you may have to change banks if you move
  • Fewer services and account types may be available

Interest rates

Interest rates are important for two reasons. Paying less interest on your loans and earning more interest on your savings puts more money in your pocket to help you achieve your financial goals. But interest rates vary from institution to institution. So consider shopping around to find the best rates.


Do you prefer to do your banking from your computer or mobile device? If so, consider a bank or credit union that offers this capability. Most banks and credit unions now offer eBanking options. Talk with your financial institution representative to determine which option may be best for you.

How Accessible is the Banking Partner?

Most banks, and many credit unions, will offer clients and members the option of withdrawing cash through linked ATMs. Sometimes, though, you may need to pay a fee to access the funds in your account through an ATM. Know the facts before signing on to become a client or member. At Desert Financial, you’ll have access to the CO-OP Network of nearly 30,000 ATMs worldwide.

Benefits of Credit Unions

Banks and credit unions are different in lots of ways, including the benefits they offer. First, let’s tackle the credit union. Here are a few perks of membership with them:

  • Personalized customer service. Want to feel like an insignificant blip on the radar of time and space? Join a big corporate bank. To them, you’re an account number that makes them money. Credit unions (and smaller regional banks too) can offer a personal touch because they actually care about you. What a concept.
  • More financial literacy resources. A lot of credit unions will offer financial education, counseling or coaching. They want you to win with money. But—and this is a big but—credit unions may encourage you to get loans for your car and other big expenses. Just say no. Nada. Nope. Not gonna do it. Ever. Get the point? Debt-free is the only way to win with money.
  • Free checking accounts. Credit unions can’t give you money for nothing, but the checking account might be free. And some credit unions don’t even require a minimum balance (or a very low one), which is a good thing when you’re counting every penny.
  • Lower fees and higher savings interest rates. We touched on this earlier, but fees and interest rates are two giant differences between banks and credit unions. That extra half a percent in interest might not seem like a big deal now, but as that builds up over decades, it could be the difference between a trip to Paris, Texas, and a trip to Paris, France.
  • Community presence. Because they’re focused on their members, credit unions often do things for the people in their local communities. They might give scholarships or grants to college students, or they might pitch in with fundraisers. Not so much with the big-box banks. If you’re community-focused, this perk might be important to you.

All of these benefit sound great—and they are—but credit unions aren’t perfect (neither are banks, by the way). You’ll have to decide if their perks are better than what a bank can offer.

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