What's the difference between a credit union and a bank?

So, you’re planning to open a new bank account, but not sure where to start? There are two basic choices in banking, credit unions or banks. At first glance they may seem similar, but when looking deeper you’ll actually discover there are notable differences.

Let’s compare the differences between credit unions and banks so when you open your next account, it’s on a first name basis.

First things first; What’s the real difference between banks and credit unions?

While banks and credit unions are both viable financial institutions who are both insured by a government agency, they often have different ways of conducting business with their customers.

A simple difference is that a credit union is a not-for-profit member owned organization. Typically, when you open an account at any credit union, the credit union will open a “Share” savings account for you. This account quite literally is your share of the Credit Union, making you a shareholder and member of the Credit Union. As a non-profit organization working for its members, profits are returned to members in the form of higher earnings on deposits, lower rates on loans, and lower fees.

Historically, credit unions are founded on the ideal of “people helping people” – as they were created to serve a specific geographic community or a professional, educational, association or familial affiliation. Because of this philosophy, credit unions are known for providing personalized service to better the fiscal health of their members. Credit unions often provide complimentary educational seminars and other financial literacy programs to educate members and the communities they serve.

Unlike credit unions, banks are “for profit” corporations and may have outside corporate shareholders. As profits need to be generated to pay shareholder dividends, banks typically offer lower rates on savings, charge higher rates on loans, and have higher fees than credit unions do. They are often larger than credit unions, which means their customer service is sometimes lacking a personal touch.

Which is better for me - a credit union or a bank?

The most important factor when choosing a financial institution is identifying your individual goals and choosing a partner that can help you achieve them. Why should you consider choosing a credit union over a bank? Credit unions provide the same products and services as large banks with better rates, lower fees, insurance protection and great member service right in your own backyard. But credit unions are more than just products and rates. Credit unions have a unique approach to serving their members you won’t find at a typical bank. Here at Jovia, we know that everyone doesn’t have the same goals in life, so we know one size banking doesn’t fit all. We spend time getting to know you, your goals and your challenges, so we can provide personalized recommendations to meet your individual needs. Plus, we’re Long Islanders too, so we understand what it’s like to live, work and go to school in this community. At Jovia you’re our neighbor – not just an account number.

Ready to join a credit union? Open your Share account with Jovia today!