Credit Unions vs. Banks

When it comes to banking, Americans are exceptionally loyal. According to a 2025 Bankrate survey, consumers have kept their checking account open for an average of 19 years and their savings account open for an average of 17 years. (Online-only accounts have been open for 6 years, on average.)

If you happen to be looking for a new financial institution, however, you may be considering credit unions and banks. If so, read on to learn about the key differences between the two, so you can find out which one is right for you.

No matter which you choose, your money is protected. Credit unions are insured by the NCUA, and banks are insured by the FDIC. Your money is safe up to $250,000 if your financial institution should collapse.

The key difference between credit unions vs. banks

Both credit unions and banks accept deposits, provide loans, and offer other financial services. The key difference between a credit union and a bank is ownership.

A credit union is a nonprofit that is owned by its customers.

• Account holders aren’t just customers; they’re member-owners of the credit union. That means they benefit directly from the credit union’s financial success.
• A credit union is a financial cooperative. Money coming in from credit union members benefits other members in the form of, for example, loans. Members take care of each other.
• Membership may be limited to a specific community such as veterans, members of a union, or people living in a particular geographic area.
• Members have a voice in how the credit union is run. They elect a volunteer board of directors to manage the credit union. Members also vote to approve policy decisions.

A bank is a for-profit institution that is owned by corporations or shareholders.

• Investors own the bank. Shareholders benefit from the bank’s financial success.
• A bank is a corporate entity. It is primarily profit-driven.
• Banks are open to the general public. Nearly anyone can open an account.
• Executives and shareholders decide how the bank is run. Customers have no formal decision-making power.

This ownership difference affects each institution’s rates, fees, services, and products. Credit unions return profits to their members, in the form of higher interest rates on deposits, lower interest rates on loans, and lower fees than banks. However, banks may have more branches, more cutting-edge technology, and a wider array of products than credit unions.

Similar products, different names

Credit unions and banks offer similar financial products but use different terminology.

• Dividend rate vs. interest rate. Credit unions pay members dividends, which are earnings (profits) on that member’s share in the credit union. Banks pay customers interest on their deposits.
• Certificates vs. CDs. A share certificate is a type of savings account offered by credit unions, while CDs are offered by banks. Both help you earn more from your savings than if you’d kept that money in a traditional savings account. You simply need to leave the money untouched for a specific period of time.

The benefits of banking with a credit union

Because a credit union is owned by its members, it offers some special benefits. Here are just a few benefits of joining a credit union:

• Lower fees. Credit unions do not have to pay dividends to shareholders, so any profits are returned to members in the form of lower fees than banks charge.
• Better interest rates. Credit unions typically have lower operating costs than banks, so they can pass those savings onto members by offering higher interest rates on savings accounts. Similarly, they offer lower interest rates on loans.
• Customer service. Credit unions pride themselves on offering more personalized customer service than banks. They also tend to be more involved with the communities they serve.
• Shared access. Credit unions cooperate with one another, so you can use tens of thousands of credit union ATMs (as well as some branches of other brands) throughout the United States.

When credit unions profit, so do customers

Credit unions don’t need to pay dividends to shareholders. So any profits are returned to members in the form of lower fees and higher interest rates on savings.

The benefits of banking with a bank

Both credit unions and banks offer a range of financial products and services including checking accounts, savings accounts, loans, credit cards, and online and mobile banking services. A bank may be a better option if:

• You need physical access to your bank throughout the United States (or overseas). Only the very largest banks can offer this. Regional banks typically have a footprint that’s similar to a credit union.
• You want access to the latest cutting-edge technology or offerings such as cryptocurrency management or other alternative investments.

Why choose Patelco Credit Union

When you join Patelco, you become a member and an owner. We offer some great benefits for our members, including:

• Some of the best savings rates in the nation
• Rewards for on-time payments
• Free checking
• Online banking and a Mobile App so you can check your balance, make deposits, and make purchases — anytime, from anywhere
• Free overdraft protection from your Patelco savings account
• 36 branches, plus access to 6,000+ shared-service branches
• 30,000+ surcharge-free ATMs nationwide
• Credit cards to fit your lifestyle
• Car loans with flexible terms
• Affordable home loans
• Discounts on rental cars, car buying, vacations, and entertainment
• Financial wellness resources and help from a Certified Financial Specialist

The best type of financial institution for you depends on your preferences and needs. If you’re looking for lower fees and higher interest rates, a credit union may be the right choice for you. Explore the benefits for Patelco members and join today.