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Credit Unions vs. Banks - What Are Credit Unions and How Are They Different Than Banks?

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Credit unions are similar to banks in terms of services – accepting deposits and offering loans, credit cards and a wide array of other financial tools. Although credit unions and banks provide similar products and services, there are key differences in the way they operate.

Credit unions are member-owned and much more focused on the community they serve – making them a better option for someone that needs a more personalized banking experience. Let's look more into how a credit union operates versus a bank.

What makes credit unions unique

Model and members

Unlike banks, members own credit unions, not outside shareholders. Members pool their money together and use the funds to provide services, such as loans, to each other. Being a member also means that you are not just a customer. In other words, you have a say in how the organization is managed.

Since credit unions are not-for-profit entities, they can focus on providing better services to their member-owners. Any extra profits earned (after covering their operating expenses) go back to members in the form of reduced fees, lower loan rates or higher savings rates.

Typically, you can become a member of a credit union if you:
  • Live in a certain community or location
  • Work for an employer that partners with one
  • Are family of an existing member
  • Are a member of a group such as a church or school
Community involvement and putting members first

Credit unions are known to be highly involved in the community and for putting their members first.

Typically credit unions:
  • Provide free financial education for the betterment of their members and community
  • Donate and volunteer at local charities and organizations that support the community
  • Provide small businesses with the advice and resources they need to succeed
These organizations prioritize the financial well-being of their members and look to give back to the local community that they serve. As a member of a credit union, you will receive a more personalized experience, a key differentiator from banks.

Credit unions vs. banks

Besides the fact that banks are not owned by their customers, credit unions are more community focused and localized than banks, meaning that they foster more personal relationships with their members. This leads to their ability to offer tailored solutions and their greater interest in the well-being of the community. Plus, you experience better customer support with credit unions, as they know you, your situation and your needs on a more individual level.

You can find better interest rates on deposit accounts (paid to you, the member, in the form of a dividend). Typically, you can also find lower interest rates and lower fees on loans and credit cards, or even have certain fees waived. Additionally, with credit unions, you can access your money anywhere, as many organizations are a part of an ATM and Shared Branch network to widen their reach nationally.

Become a member today

If you are ready to become a member, you can join Power Financial Credit Union. We are here to guide our members and help you do more with your money. We have almost 35,000 satisfied members and have proudly served the community in South Florida for 70 years.