General Article

Credit Unions vs. Banks: What’s the Difference?

There are several differences between the bank and federal credit union near me.

Business structure

The first difference is the structure of the business. The bank is going to be a for-profit financial company when the credit union is a not for profit financial company. The bank can be large or small and national or local. The credit union is usually only going to be a local company and will be smaller. The bank is a public company lead by board members and the credit union is run by members of the credit union where all members will need to agree.

Products

The second difference is that they are going to have a variety of different products and services. The bank is going to have a lot of products and services that go beyond consumer banking. The credit union is going to narrow down all of the products and services for their consumers. There are some credit unions that will offer an account to a small business but most of the time it is going to focus on the financial needs of the members. This is one of the reasons why they are able to offer lower interest rates.

Customer service

The third difference is the accessibility and customer service that you are going to get from them. The bank is going to have an ATM where the customers are going to have access to their funds no matter what time of day it is. They are also going to be open on the weekend for their customers. With a credit union, you are not going to have mobile banking, electronic banking, or an ATM. This means that they are not going to have a physical presence for you but they will make this up with their customer service.

Fees

The fourth difference is the fees, incentives, and rates that you will get from them. The bank is going to charge you a lot more money. This also means that the bank is going to pay the customer a lower interest earning on their deposit account and have a higher interest rate on the loan. But the overdraft fees and non-sufficient funds are going to be lower at the credit union when compared to the bank. The deposit is only going to be about five dollars and there is no minimum daily balance for the credit union.

Tax structure

The fifth difference is the structure of the taxes. Since the bank is a for-profit company, they are going to be subject to the state and federal incomes taxes on the profiles from the corporate. This is going to be done director or through the taxes that paid by their owners. But a credit union is not going to have to pay state or federal income taxes. This is one of the main reasons why they are going to have more favorable interest rates to their customers and the fees are cheaper than the bank is going to be.

Insurance

The sixth difference is deposit insurance. The deposit insurance for the bank is going to come from the Federal Deposit Insurance Corporation. Then the deposit insurance for the credit union is going to come from the National Credit Union Administration. This is going to be true of the state and federal credit unions at the same time. Most of the time, the funds are going to be insured for the same amount of money. But this is going to depend on the type of account that it is and the number of people who own the account.