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Key Takeaways
This has led to a bigger conversation about the role of financial institutions and what they offer.
This guide explores those questions and gets expert insight from Vinnie Fiordelisi, Vice President of Marketing at Power Financial Credit Union.
Banks are for-profit institutions. They can be public or private, and their main responsibility is to generate returns for shareholders. Decisions are often made based on profitability and investor expectations.
Credit unions are not-for-profit cooperatives owned by their members—every account holder, regardless of their deposits, has a stake and a vote. Profits are reinvested into the credit union to improve services or returned to members through better rates, lower fees, and dividends.
“At Power Financial Credit Union, we put our members’ financial well-being first,” says Vinnie Fiordelisi. “Our not-for-profit status allows us to offer competitive rates and personalized service that’s truly member-centric.”
Credit unions can offer more targeted support because they serve specific communities or groups. Smaller member bases and local decision-making allow for flexibility that’s hard to find at bigger banks.
Many credit unions are committed to financial education, local initiatives, and social impact. This is a big differentiator for those who want to bank with a purpose.
Credit unions are great, but not for everyone. Here are a few things to consider:
Historically, credit unions required affiliation with a specific employer, location, or organization. While many have broadened their criteria, some still apply.
Big banks typically have more branches and more ATMs. Yes, but credit unions have shared branching. Shared branching is a national network of credit unions from all over the country that share facilities to give members thousands of convenient locations to perform financial transactions.
Credit unions offer everyday banking products like the big banks but some smaller institutions may have limited options for commercial lending, international transfers, or investment portfolios.
If a credit union is right for you and your values, the process is easier than you think:
1. Research Your Options
Use the NCUA Credit Union Locator or similar tools to find credit unions you can join.
2. Compare Products and Services
Compare rates, accounts, fees, branch access, and digital capabilities. Make sure the institution aligns with your financial goals.
3. Apply for Membership
Most credit unions require a small deposit to open a savings account and become a member. Be prepared to provide ID and proof of eligibility.
4. Enroll in Mobile and Online Banking
Once enrolled, you will be able to check balances, deposit checks, pay bills and transfer money from your phone or desktop.
5. Move Funds and Update Payments
Move your direct deposits, scheduled payments, and linked accounts. Note that depending on when you switch it, direct deposit might not happen immediately.
6. Close Old Account
Once you’ve confirmed all funds and payments are working, close your old account to avoid fees or activity.
There’s no one answer. Credit unions are the way to go if you want lower fees, more personal service, and community involvement. However, a bank may be the way to go if you need national branch access, or global capabilities. Know your financial habits, service expectations, and long-term goals, and then choose the institution that best supports them.
It’s a personal decision between a bank and a credit union. What matters most: rates and service, convenience and access, or community involvement?
A credit union is worth considering if you want a financial institution that prioritizes members over margins. Power Financial Credit Union, for example, offers tools, guidance, and services to help you feel more in control and connected to your money.
Are credit unions better than banks?
It depends on your needs. Credit unions often offer better rates and personal service, while banks offer broader access.
Are credit unions as safe as banks?
Yes. Credit unions are federally insured just like banks—up to $250,000.
Can anyone join a credit union?
Each credit union has its own membership criteria. However, many have become more open, often allowing membership through location, employer, or community affiliation.
Do credit unions offer online banking?
Yes, most credit unions now offer online and mobile banking. Credit unions have been investing heavily in recent years to improve their digital banking experiences.
What’s the biggest difference between banks and credit unions?
Ownership and purpose. Banks are for-profit and serve shareholders. Credit unions are not for profit and exist to serve their members.
Key Takeaways
- Credit unions are not-for-profit and member-owned; banks are for-profit and serve shareholders.
- Credit unions have lower fees and more personalized services; banks have broader networks.
- Membership requirements still exist for credit unions but have become more inclusive.
- Both offer the same financial products, but rates, access, and service differences will impact your experience.
- Switching to a credit union is a straightforward process that can be done in a few steps.
This has led to a bigger conversation about the role of financial institutions and what they offer.
This guide explores those questions and gets expert insight from Vinnie Fiordelisi, Vice President of Marketing at Power Financial Credit Union.
Credit Unions vs. Banks: A Structural Comparison
Both credit unions and banks offer core financial services—checking and savings accounts, credit cards, personal loans, and mortgages—but their structures, priorities, and incentives are very different.Banks are for-profit institutions. They can be public or private, and their main responsibility is to generate returns for shareholders. Decisions are often made based on profitability and investor expectations.
Credit unions are not-for-profit cooperatives owned by their members—every account holder, regardless of their deposits, has a stake and a vote. Profits are reinvested into the credit union to improve services or returned to members through better rates, lower fees, and dividends.
“At Power Financial Credit Union, we put our members’ financial well-being first,” says Vinnie Fiordelisi. “Our not-for-profit status allows us to offer competitive rates and personalized service that’s truly member-centric.”
Credit Union Benefits
Competitive Rates and Lower Fees
Credit unions often offer lower loan interest rates and higher returns on savings. According to NCUA data, their rates are often better than those of traditional banks.
Personalized Service
Credit unions can offer more targeted support because they serve specific communities or groups. Smaller member bases and local decision-making allow for flexibility that’s hard to find at bigger banks.
Community-Focused Values
Many credit unions are committed to financial education, local initiatives, and social impact. This is a big differentiator for those who want to bank with a purpose.
Before You Make the Switch
Credit unions are great, but not for everyone. Here are a few things to consider:
Membership Requirements
Historically, credit unions required affiliation with a specific employer, location, or organization. While many have broadened their criteria, some still apply.
Branch Network and ATMs
Big banks typically have more branches and more ATMs. Yes, but credit unions have shared branching. Shared branching is a national network of credit unions from all over the country that share facilities to give members thousands of convenient locations to perform financial transactions.
Services
Credit unions offer everyday banking products like the big banks but some smaller institutions may have limited options for commercial lending, international transfers, or investment portfolios.
How to Switch to a Credit Union: Step-by-Step
If a credit union is right for you and your values, the process is easier than you think:1. Research Your Options
Use the NCUA Credit Union Locator or similar tools to find credit unions you can join.
2. Compare Products and Services
Compare rates, accounts, fees, branch access, and digital capabilities. Make sure the institution aligns with your financial goals.
3. Apply for Membership
Most credit unions require a small deposit to open a savings account and become a member. Be prepared to provide ID and proof of eligibility.
4. Enroll in Mobile and Online Banking
Once enrolled, you will be able to check balances, deposit checks, pay bills and transfer money from your phone or desktop.
5. Move Funds and Update Payments
Move your direct deposits, scheduled payments, and linked accounts. Note that depending on when you switch it, direct deposit might not happen immediately.
6. Close Old Account
Once you’ve confirmed all funds and payments are working, close your old account to avoid fees or activity.
Should You Switch?
There’s no one answer. Credit unions are the way to go if you want lower fees, more personal service, and community involvement. However, a bank may be the way to go if you need national branch access, or global capabilities. Know your financial habits, service expectations, and long-term goals, and then choose the institution that best supports them.
Bottom Line
It’s a personal decision between a bank and a credit union. What matters most: rates and service, convenience and access, or community involvement?A credit union is worth considering if you want a financial institution that prioritizes members over margins. Power Financial Credit Union, for example, offers tools, guidance, and services to help you feel more in control and connected to your money.
Frequently Asked Questions (FAQs)
Are credit unions better than banks?It depends on your needs. Credit unions often offer better rates and personal service, while banks offer broader access.
Are credit unions as safe as banks?
Yes. Credit unions are federally insured just like banks—up to $250,000.
Can anyone join a credit union?
Each credit union has its own membership criteria. However, many have become more open, often allowing membership through location, employer, or community affiliation.
Do credit unions offer online banking?
Yes, most credit unions now offer online and mobile banking. Credit unions have been investing heavily in recent years to improve their digital banking experiences.
What’s the biggest difference between banks and credit unions?
Ownership and purpose. Banks are for-profit and serve shareholders. Credit unions are not for profit and exist to serve their members.