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From receiving your first paycheck to managing your finances post-retirement, a financial institution can be a lifelong partner that supports your goals and helps you reach financial milestones during every life stage.
However, not all financial institutions are the same, and your choice can influence your financial future. If you're thinking about switching to a different institution or looking to open an account for the first time, comparing credit unions vs banks is an important consideration.

In this blog, you’ll learn:
However, you'll find that selecting an institution that aligns with your personal goals and values makes a difference in your financial well-being. Banking doesn't have to be strictly transactional. Picking the right institution can benefit you and your loved ones, your community, and the causes you care about.
What's the difference between a bank and credit union? There is a fundamental difference in terms of goals and mission. Banks seek profits, and some major institutions have a history of using questionable practices to meet sales quotas.
Credit unions exist for a different purpose and will always have your best interests at heart. You can count on your credit union representative to recommend solutions adapted to your unique needs and goals rather than products that drive results for the financial institution.
The Bank Model
Banks are for-profit institutions that deliver a wide range of financial services. Banking fees and interest on loans typically cover operating costs and yield a profit that corresponds to around 1% of the bank's assets.
Shareholders receive a portion of these profits in the form of dividends, but a bank's board of directors can also decide to invest profits, open new branches, or launch new digital services.
What Makes Credit Unions Different?
The main difference is that credit unions don't operate as for-profit institutions. The goal is to generate enough revenue to cover operating costs. If the credit union makes a profit, the surplus is distributed to members in the form of lower fees or more advantageous interest rates.
When comparing banks vs credit unions, it's also worth noting that the scope of operations can vastly differ. While banks typically aim to develop a national or regional presence, credit unions tend to focus on a community. In fact, the cooperative structure of a credit union means that funds from the community are used to lend money to people and small businesses in the area, contributing to a strong local economy.
Historically, credit unions have restricted membership to individuals who belong to a profession or live within a specific area. The current trend is for credit unions to broaden their membership requirements.
Bank vs Credit Union: Fees and Other Considerations
What's the difference between a bank and a credit union? Let's take a closer look at the fees you can expect to pay and other practical considerations.
Fees
Due to the for-profit model adopted by banks, fees tend to be higher and can increase over time. Even though the current trend is to reduce or waive banking fees, credit unions consistently remain more affordable.
Saving Rates
Credit unions outperform banks when it comes to offering more advantageous APYs along with a diversity of financial products. For instance, the average rate for a five-year Certificate of Deposit is 2.93% for credit unions, while banks offer comparable products with an average rate of 2.05%.
Lending Rates
Lending rates tend to be lower with credit unions since these institutions redistribute profits in the form of lower APRs. You'll also find that credit unions are more willing to review each loan application in detail and work with each applicant to assess their financial situation on a case-by-case basis, which can result in better loan terms.
Number of Branches
Banks and credit unions offer similar digital experiences, but banks tend to actively extend their presence by opening branches in new areas. The for-profit model means that some branches can close if they're not getting enough foot traffic, and some services can switch to digital platforms if deemed too time-consuming to offer in person.
A key distinction when comparing a bank vs. a credit union is that credit unions focus on the community. You'll be more likely to find convenient branch and ATM locations, and you'll see this local network grow over the years.
Focusing on People and Communities
Dealing with a major bank can be frustrating due to the tendency to outsource services to call centers or automate some processes. Credit unions prioritize face-to-face interactions and offer outstanding member service as one of their core values.
You can expect a higher level of personalization as well as a valuable relationship with your credit union representative as you set a financial course for yourself and your family. You'll still have access to modern and convenient digital experiences, but these digital tools aim to supplement the in-branch experience rather than replace it.
Sound Leadership
With the credit union model, members are the owners, and a volunteer board of directors makes decisions. Members have a vote in important matters, and every decision taken is in the best interest of the members since there are no shareholders.
Local Focus
Credit unions play an important role in making financing and other products accessible. Saving for college, retiring comfortably, or launching a small business are examples of financial goals that benefit the whole community and contribute to a strong local economy.
It's also common to see credit unions support local causes, including non-profits or youth sports leagues.
A Lower Risk Profile
Historically speaking, banks tend to take more risks on equity to boost profits. Credit unions are more likely to adopt risk-averse strategies to continue offering affordable financial products to the community.
This discrepancy became apparent during the 2008 crisis, when 23% of mortgages issued by banks were found to be subprime, while subprime loans only made up 4% of all mortgages issued by credit unions.
Regulations and Insurance
Just like banks, credit unions operate in a strictly regulated environment designed to protect consumers. Deposits are protected through the National Credit Union Share Insurance Fund, a fund that insures up to $250,000 per member and more for some retirement and joint accounts.
This mechanism is similar to the Federal Deposit Insurance Corporation, which insures funds held by banks.
Technology
Credit unions have successfully navigated the digital transition and adopted tech solutions that create a safe and personalized experience. For instance, credit unions can use AI to detect fraud or rely on the latest cybersecurity solutions to stop attacks.
Credit unions are also leading the way when it comes to adopting convenient digital experiences, with 87% of credit unions having a digital transformation strategy in place. Tools like remote check deposits, online banking, or mobile payments enhance your banking experience while keeping your sensitive data safe.
Personal Risks
Credit unions can help lower your personal risks by providing you with the right products at the right cost, making it easier to manage your financial life on your own terms. These institutions also tend to be more flexible regarding late payments or overdraft fees.
Access to quality customer service ensures that you always have the information you need to make a decision, and the human touch that sets credit unions apart can help you be more proactive while also enhancing your financial literacy level.
Assessing Your Financial Needs and Goals
Before switching to PFCU, taking the time to reflect on your current financial situation can be beneficial. Whether you're thinking about homeownership or want to catch up on your retirement savings, having a clear picture of your financial priorities will help you get the most out of what PFCU offers.
Researching Local Credit Unions
Find out more about local credit unions by doing a Google search or talking to people you know. We have served the South Florida community since 1951 so you probably know someone who banks with PFCU.
Online reviews and recommendations from people you know are a great way to compare your options and get a better idea of the fees and experience you can expect.
You should also check the membership requirements. Your profession and location will determine which credit unions you can join. At PFCU, we welcome anyone who lives, works, or goes to school in South Florida, as well as their family members. We also have partnerships with specific employers.
Opening an Account at a Credit Union
For your safety, your credit union will verify your identity when you join and open an account. Here's what you'll need to open an account with PFCU:
You should also compare the different account types available and review the perks offered to choose the right product for your needs:
Once your new account is open, transferring your various banking services to PFCU is a quick and easy process.
Direct Deposits and Automatic Payments
The first thing you should do is update your direct deposit information to receive your next paycheck into your PFCU checking account.
You can download this convenient direct deposit form, fill it out, and submit it to your employer. You can also update your direct deposit information for Social Security payments, pensions, and other forms of income.
Next, you can use PFCU's online bill pay tool to set up automated recurring payments to utilities and other creditors. This simple step will help you keep up with recurring expenses and prevent late fees.
Get started by learning more about transferring your direct deposits.
Closing Your Old Bank Account
Avoid unnecessary fees by closing your old bank account. Some institutions allow you to complete this step online or over the phone, but others might require you to visit a branch to verify your identity.
Your old financial institution can also wire any remaining balance to your new PFCU account. Don't forget to download your banking statements for your personal records before closing your account for good.
PFCU also has a request to close account form you can download to facilitate this process.
Moving Over Your Savings and Investments
Once you have a new checking account in place, you can look into other financial products offered by PFCU. Thanks to our wide selection of products, you can manage multiple aspects of your financial life through the same institution:
Setting Up Online and Mobile Banking
Take advantage of our convenient digital tools by setting up your online banking account. Once you create your account, you'll be able to check your balance, pay bills, and more from a computer or phone.
Registering for online banking is easy:
As a Power Financial Credit Union member, you can get more value out of our product range by familiarizing yourself with the perks we offer and leveraging our affordable credit lines.
Utilizing Low-Cost Loans and Credit Cards
What's the difference between a bank and a credit union like PFCU? One of the key differences is that credit unions distribute profits to members in the form of lower interest rates.
As a result, PFCU offers loans and credit cards with competitive interest rates. These products are ideal for building credit, financing major purchases, and reaching your short- and long-term financial goals.
If you have existing debt, a PFCU representative can help you explore refinancing and balance transfer options to take advantage of our competitive rates and manage your credit while reducing your monthly payments.
PFCU offers a wide range of credit lines to meet the varied needs of our members:
Taking Advantage of Member Perks
Don't forget to take advantage of the many member perks we offer, including:
What's the difference between a bank and a credit union? Banks and credit unions differ in terms of structure, mission, and scope.
As a consumer, banking with a credit union has several advantages, including more competitive rates, better customer service, and the peace of mind of knowing that your financial institution has your best interests at heart.
Making the switch is easier than you think, and our team of trusted advisors is available to answer any questions you might have, assist you with transferring to your account, and explore new products aligned with your financial needs.
Get in touch with us today to find out more about switching to Power Financial Credit Union!
From receiving your first paycheck to managing your finances post-retirement, a financial institution can be a lifelong partner that supports your goals and helps you reach financial milestones during every life stage.
However, not all financial institutions are the same, and your choice can influence your financial future. If you're thinking about switching to a different institution or looking to open an account for the first time, comparing credit unions vs banks is an important consideration.

In this blog, you’ll learn:
- The differences between credit unions and banks.
- Are credit unions safer and more affordable than banks?
- How to switch from a bank to a credit union.
- How to effectively use your credit union’s services.
Importance of Financial Institution Choice
A financial institution can support you during every life stage and milestone by giving you access to the right products and sharing valuable advice. With over 4,700 banks and just as many credit unions to choose from, there is a wide range of options available.However, you'll find that selecting an institution that aligns with your personal goals and values makes a difference in your financial well-being. Banking doesn't have to be strictly transactional. Picking the right institution can benefit you and your loved ones, your community, and the causes you care about.
What’s the Difference Between a Credit Union and a Bank?
What's the difference between a bank and credit union? There is a fundamental difference in terms of goals and mission. Banks seek profits, and some major institutions have a history of using questionable practices to meet sales quotas.Credit unions exist for a different purpose and will always have your best interests at heart. You can count on your credit union representative to recommend solutions adapted to your unique needs and goals rather than products that drive results for the financial institution.
The Bank Model
Banks are for-profit institutions that deliver a wide range of financial services. Banking fees and interest on loans typically cover operating costs and yield a profit that corresponds to around 1% of the bank's assets.
Shareholders receive a portion of these profits in the form of dividends, but a bank's board of directors can also decide to invest profits, open new branches, or launch new digital services.
What Makes Credit Unions Different?
The main difference is that credit unions don't operate as for-profit institutions. The goal is to generate enough revenue to cover operating costs. If the credit union makes a profit, the surplus is distributed to members in the form of lower fees or more advantageous interest rates.
When comparing banks vs credit unions, it's also worth noting that the scope of operations can vastly differ. While banks typically aim to develop a national or regional presence, credit unions tend to focus on a community. In fact, the cooperative structure of a credit union means that funds from the community are used to lend money to people and small businesses in the area, contributing to a strong local economy.
Historically, credit unions have restricted membership to individuals who belong to a profession or live within a specific area. The current trend is for credit unions to broaden their membership requirements.
Bank vs Credit Union: Fees and Other Considerations
What's the difference between a bank and a credit union? Let's take a closer look at the fees you can expect to pay and other practical considerations.
Fees
Due to the for-profit model adopted by banks, fees tend to be higher and can increase over time. Even though the current trend is to reduce or waive banking fees, credit unions consistently remain more affordable.
Saving Rates
Credit unions outperform banks when it comes to offering more advantageous APYs along with a diversity of financial products. For instance, the average rate for a five-year Certificate of Deposit is 2.93% for credit unions, while banks offer comparable products with an average rate of 2.05%.
Lending Rates
Lending rates tend to be lower with credit unions since these institutions redistribute profits in the form of lower APRs. You'll also find that credit unions are more willing to review each loan application in detail and work with each applicant to assess their financial situation on a case-by-case basis, which can result in better loan terms.
Number of Branches
Banks and credit unions offer similar digital experiences, but banks tend to actively extend their presence by opening branches in new areas. The for-profit model means that some branches can close if they're not getting enough foot traffic, and some services can switch to digital platforms if deemed too time-consuming to offer in person.
A key distinction when comparing a bank vs. a credit union is that credit unions focus on the community. You'll be more likely to find convenient branch and ATM locations, and you'll see this local network grow over the years.
Focusing on People and Communities
Dealing with a major bank can be frustrating due to the tendency to outsource services to call centers or automate some processes. Credit unions prioritize face-to-face interactions and offer outstanding member service as one of their core values.
You can expect a higher level of personalization as well as a valuable relationship with your credit union representative as you set a financial course for yourself and your family. You'll still have access to modern and convenient digital experiences, but these digital tools aim to supplement the in-branch experience rather than replace it.
Why Credit Unions Are as Safe as Banks
There is a common misconception that banks are safer because of their size. The truth is that credit unions are just as safe, if not safer, because of their sound leadership, focus on the local community, lower risk profile, and several other characteristics.Sound Leadership
With the credit union model, members are the owners, and a volunteer board of directors makes decisions. Members have a vote in important matters, and every decision taken is in the best interest of the members since there are no shareholders.
Local Focus
Credit unions play an important role in making financing and other products accessible. Saving for college, retiring comfortably, or launching a small business are examples of financial goals that benefit the whole community and contribute to a strong local economy.
It's also common to see credit unions support local causes, including non-profits or youth sports leagues.
A Lower Risk Profile
Historically speaking, banks tend to take more risks on equity to boost profits. Credit unions are more likely to adopt risk-averse strategies to continue offering affordable financial products to the community.
This discrepancy became apparent during the 2008 crisis, when 23% of mortgages issued by banks were found to be subprime, while subprime loans only made up 4% of all mortgages issued by credit unions.
Regulations and Insurance
Just like banks, credit unions operate in a strictly regulated environment designed to protect consumers. Deposits are protected through the National Credit Union Share Insurance Fund, a fund that insures up to $250,000 per member and more for some retirement and joint accounts.
This mechanism is similar to the Federal Deposit Insurance Corporation, which insures funds held by banks.
Technology
Credit unions have successfully navigated the digital transition and adopted tech solutions that create a safe and personalized experience. For instance, credit unions can use AI to detect fraud or rely on the latest cybersecurity solutions to stop attacks.
Credit unions are also leading the way when it comes to adopting convenient digital experiences, with 87% of credit unions having a digital transformation strategy in place. Tools like remote check deposits, online banking, or mobile payments enhance your banking experience while keeping your sensitive data safe.
Personal Risks
Credit unions can help lower your personal risks by providing you with the right products at the right cost, making it easier to manage your financial life on your own terms. These institutions also tend to be more flexible regarding late payments or overdraft fees.
Access to quality customer service ensures that you always have the information you need to make a decision, and the human touch that sets credit unions apart can help you be more proactive while also enhancing your financial literacy level.
How to Switch From a Bank to a Credit Union
Switching to a credit union is a simple process. Power Financial Credit Union (PFCU) offers South Florida residents a convenient online and in-branch experience for new members. Our eligibility requirements are broad, and anyone who lives, works, or attends school in South Florida is welcome.Assessing Your Financial Needs and Goals
Before switching to PFCU, taking the time to reflect on your current financial situation can be beneficial. Whether you're thinking about homeownership or want to catch up on your retirement savings, having a clear picture of your financial priorities will help you get the most out of what PFCU offers.
Researching Local Credit Unions
Find out more about local credit unions by doing a Google search or talking to people you know. We have served the South Florida community since 1951 so you probably know someone who banks with PFCU.
Online reviews and recommendations from people you know are a great way to compare your options and get a better idea of the fees and experience you can expect.
You should also check the membership requirements. Your profession and location will determine which credit unions you can join. At PFCU, we welcome anyone who lives, works, or goes to school in South Florida, as well as their family members. We also have partnerships with specific employers.
Opening an Account at a Credit Union
For your safety, your credit union will verify your identity when you join and open an account. Here's what you'll need to open an account with PFCU:
- A state-issued ID
- Proof of citizenship or resident alien status
- A secondary form of identification
- Proof of address
- Your SSN
You should also compare the different account types available and review the perks offered to choose the right product for your needs:
- With no overdraft fees, online banking, and a Visa® debit card, our Regular Checking account is a popular choice.
- We also offer a Cash-Back Checking account designed to help you earn rewards on the balance of your account.
- If you're between 18 and 24, our Student Checking account is an ideal option with no monthly fees.
- For 13- to 17-year-olds, our Teen Checking account will empower you to make smart financial decisions.
Transferring Your Banking Services
Once your new account is open, transferring your various banking services to PFCU is a quick and easy process.Direct Deposits and Automatic Payments
The first thing you should do is update your direct deposit information to receive your next paycheck into your PFCU checking account.
You can download this convenient direct deposit form, fill it out, and submit it to your employer. You can also update your direct deposit information for Social Security payments, pensions, and other forms of income.
Next, you can use PFCU's online bill pay tool to set up automated recurring payments to utilities and other creditors. This simple step will help you keep up with recurring expenses and prevent late fees.
Get started by learning more about transferring your direct deposits.
Closing Your Old Bank Account
Avoid unnecessary fees by closing your old bank account. Some institutions allow you to complete this step online or over the phone, but others might require you to visit a branch to verify your identity.
Your old financial institution can also wire any remaining balance to your new PFCU account. Don't forget to download your banking statements for your personal records before closing your account for good.
PFCU also has a request to close account form you can download to facilitate this process.
Moving Over Your Savings and Investments
Once you have a new checking account in place, you can look into other financial products offered by PFCU. Thanks to our wide selection of products, you can manage multiple aspects of your financial life through the same institution:
- Build a nest egg with one of our savings accounts. We offer a convenient online portal where you can get started with the sign-up process once you're a member.
- Boost your credit score while managing your spending with one of our personal credit cards.
- Transfer your retirement savings to PFCU with one of our IRA options.
- Lower your monthly payments by refinancing an existing auto loan.
- Diversify your investment portfolio with our competitive money market accounts and certificates of deposit.
Setting Up Online and Mobile Banking
Take advantage of our convenient digital tools by setting up your online banking account. Once you create your account, you'll be able to check your balance, pay bills, and more from a computer or phone.
Registering for online banking is easy:
- Visit our online banking portal and select Log In
- Enter your PFCU member number in the username field.
- Type your Simon Says PIN in the password field.
Making the Most of Credit Union Services
As a Power Financial Credit Union member, you can get more value out of our product range by familiarizing yourself with the perks we offer and leveraging our affordable credit lines.Utilizing Low-Cost Loans and Credit Cards
What's the difference between a bank and a credit union like PFCU? One of the key differences is that credit unions distribute profits to members in the form of lower interest rates.
As a result, PFCU offers loans and credit cards with competitive interest rates. These products are ideal for building credit, financing major purchases, and reaching your short- and long-term financial goals.
If you have existing debt, a PFCU representative can help you explore refinancing and balance transfer options to take advantage of our competitive rates and manage your credit while reducing your monthly payments.
PFCU offers a wide range of credit lines to meet the varied needs of our members:
- Our personal credit cards are a flexible option with no annual fees. Our low APRs make these credit lines affordable, and our Signature card comes with exciting rewards.
- With mortgage refinance options, fixed-rate mortgages, adjustable loans, and more, our team of mortgage experts is making homeownership more accessible.
- Homeowners can take advantage of our flexible home equity products to finance major projects.
- With up to 100% financing, PFCU offers a simplified car-buying experience tailored to your unique financial situation. We also refinance existing loans to help you take advantage of our competitive rates, even if you're not planning a new car purchase.
- Finance your next leisure purchase with our boat, motorcycle, or RV loans.
- Borrow up to $100,000 at a low rate to finance your degree and build a better future. We make student loans accessible and easy to navigate, so young adults can make sound financial decisions.
- Debt consolidation, secured loans, and personal lines of credit are only a few of the options we offer if you're in need of a personal loan.
Taking Advantage of Member Perks
Don't forget to take advantage of the many member perks we offer, including:
- A partnership with Greenlight. As a PFCU member, you can open a free Greenlight account and get debit cards for your children or teens.
- Youth banking products. Help your child develop smart financial habits early with a Rocky Raccoon Youth Savings Account or a Cha-Ching! Teen Checking Account.
- Investment and retirement services. An investment specialist can help you develop a personalized strategy to make your money work for you. Our retirement services are a popular option at all stages of life.
- Insurance options. Protect your home and family with our affordable insurance options.
- A local network. As a South Florida resident, you're never far from one of our branches, shared branches, or ATMs.
- Referral program. Do you know someone who needs a better financial institution? Refer them to PFCU, and you could earn $100.
- Financial literacy resources. Learn about financial topics that are relevant to you on our blog, or plan your future with our financial calculators.
What's the difference between a bank and a credit union? Banks and credit unions differ in terms of structure, mission, and scope.
As a consumer, banking with a credit union has several advantages, including more competitive rates, better customer service, and the peace of mind of knowing that your financial institution has your best interests at heart.
Making the switch is easier than you think, and our team of trusted advisors is available to answer any questions you might have, assist you with transferring to your account, and explore new products aligned with your financial needs.
Get in touch with us today to find out more about switching to Power Financial Credit Union!