When it comes to banking, there are two main options: credit unions and banks. Both offer a variety of financial products and services, but there are some key differences between the two. If you are considering a membership with a credit union, you may have a few questions: Are credit unions better than banks? What is the difference between a credit union and a bank? What are the benefits of a credit union? What does it mean to be a credit union member?
In this article, we will discuss the answers to these questions so you can make the best decision for your personal financial needs. Please keep in mind that our member service representatives are here to answer any questions you may have.
Difference Between Credit Unions and Banks
A Credit Union is a financial institution that is member-owned and insured by the National Credit Union Association (NCUA). Credit unions are not-for-profit, which means that any profits they make are returned to the members in the form of lower fees and higher interest rates. Credit unions also serve a smaller, more defined clientele base – sharing a community focus and personalized service toward that community. This can be based on location, employment, occupation, or membership within an organization. For instance, Discovery FCU serves all of Berks County, PA. Anyone (and their immediate family) who lives, works, worships, or attends school in Berks County is eligible to join.
Conversely, a Bank is a financial institution that is owned by shareholders and insured by the Federal Deposit Insurance Corporation (FDIC). Banks are for-profit, meaning their primary goal is to make money for their shareholders. Because of this, banks often have higher fees for their customers, compared to credit unions.
Benefits of a Credit Union
There are several benefits to using a credit union, including:
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- Member-owned: Credit unions are member-owned, providing them equal part ownership as well as voting rights for elected board members. Even more, credit unions share profits with members.
- Lower fees: Credit unions often have lower fees than banks because they do not have to pay dividends to shareholders.
- Higher interest rates: Credit unions typically offer higher interest rates on savings accounts and lower interest rates on loans than banks due to lower bank expenses.
- More personalized service: Credit unions tend to have a more personal touch than banks because they serve a smaller clientele, of which are members
- Community involvement: Credit unions are leaders of their communities. They are actively involved in volunteering and fundraising for local organizations.
Are Credit Unions Better than Banks?
Whether or not credit unions are better than banks depends on your individual needs and preferences. If you are looking for lower fees, higher interest rates, and more personalized service, then a credit union may be a better option for you.
Ultimately, the best way to decide which type of financial institution is right for you is to compare your options and choose the one that offers the best features and benefits for your needs.
So, how do you decide which is right for you? Here are a few things to consider:
- Your financial needs: What are your financial goals? Credit unions provide financial counseling and planning services for all stages of life. Whether you are starting a youth savings account or planning for your retirement, Discovery FCU offers a broad range of products to fit your needs. Additionally, Financial Wellness counseling is also available to members.
- Your location: With today’s busy lifestyles, you definitely want access to your money, wherever you go. On the surface, some banks may seem to have more locations than credit unions, but that can be deceiving. With vast ATM networks and shared branches, you have increased access to your money outside of a traditional branch. Many credit unions offer shared branching, which allows you to complete transactions at other partner credit unions.
- Your preferences: Do you prefer a more personal touch or a wider range of products and services? A credit union provides both! Credit unions offer a high level of member service and a wide range of financial services that stack up to any bank.
Become a Member of Discovery FCU!
Our credit union is for the community of residents in Berks County, PA. If you live, work, worship, or attend school in Berks County, you are eligible to become a member. Immediate family members of existing credit union members are also eligible to join.
Credit union members have free access to over 55,000 ATMs nationwide and shared branching at over 5,000 credit unions for extra convenience. Discovery FCU has a full line of online services, including our digital app.
Discovery Federal Credit Union puts YOU, the member first – always! Join Discovery FCU today and take advantage of all of our member benefits. We look forward to serving you!