Credit Union vs. a Bank: What to Consider | Banking Advice

Key Takeaways

Credit unions are nonprofit financial institutions that require membership, while banks are for-profit and do not require membership.
Banks provide more access to branches and ATMs but suffer when it comes to customer service.
Credit unions offer better deals on rates and fees but lack accessibility compared to banks.

Credit unions and banks offer many of the same types of financial products and services. But there are some key differences between the two.

From ownership structure to membership requirements, there are a lot of differences between banks and credit unions that are essential to know before choosing where to put your money. You may find a stronger connection to the community with a credit union, but you may find more convenience and accessibility with a bank.

Learn more about credit unions and banks to help determine which one might be a better fit for you.

Credit Unions vs. Banks

Credit Union Pros and Cons

The pros of credit unions include better interest rates than banks, while the cons include fewer branches and ATMs.

Pros

Credit unions tend to offer higher interest rates for savings accounts than banks.
Credit unions typically charge lower interest rates for loans than banks.
Fees at credit unions frequently are lower than they are at banks.

Stacey Black, lead financial educator at BECU, a credit union with locations primarily in Washington state, says credit unions are able to return profits to their members in the form of lower interest rates and fees.

Aside from generally more attractive interest rates and lower fees, credit unions provide more personalized customer service than banks do, says Brandon Goldstein, a chartered financial consultant at Prudential Financial.

In line with the customer service advantage, Chuck Fagan, former president and CEO of Velera, a provider of payment services to credit unions, says credit unions enjoy tremendous trust from their customers.

“This level of trust and its value sets credit unions apart,” says Fagan. “Members’ trust has been partially built through credit unions’ history of providing a high level of personal and customized service.”

Cons

Some consumers might be put off by credit unions’ membership requirements, such as working for a certain employer, belonging to a specific group or living in a certain area.
Because they zero in on relatively small service areas, credit unions generally operate fewer branches than banks. However, credit unions stress that they generally belong to large networks of shared branches.
Credit unions may offer access to fewer ATMs than banks, but credit unions point out that they generally provide access to nationwide ATM networks that are often fee-free.

In the 2025 edition of the American Customer Satisfaction Index, the number and location of branches and ATMs were the lowest-rated aspects of credit unions.

As for the membership requirement, it might be one more hurdle for borrowers seeking loans from some credit unions. Credit unions can lend money only to their members, credit union organizations and other credit unions.

“Credit unions were originally formed to serve a specified community or group, and while most have broadened their mandates to serve the general public, many still maintain lending specialties that focus on loans to those groups,” says Ben Johnston, chief operating officer of Kapitus, a lender for small and midsize businesses.

Other than any shortcomings tied to membership, branches and ATMs, credit unions might trail banks when it comes to technology like mobile apps.

“While credit unions may not be bleeding edge when it comes to innovation, they can – and should – be on the leading edge,” says Fagan.

Bank Pros and Cons

Banks generally hold an advantage over credit unions when it comes to branches, ATMs and technology.

Pros

For customers seeking in-person service, banks provide access to more branches than credit unions.
In the American Customer Satisfaction Index, banks earn a slightly higher score for the number and location of ATMs than credit unions.
The average bank holds far more assets than the average credit union. As a result, banks wield a monetary edge when it comes to upgrading technology.

In general, banks give you more access than credit unions, with branches in the hundreds or thousands, rather than dozens.

Banks tend to offer better options for online banking. Between national banks creating their own apps and newer online banks specializing in digital finance, banks have the edge when it comes to accessibility.

If you expect to do most of your banking at a physical branch, a brick-and-mortar bank might be a better options for you.

Cons

Banks generally are less competitive than credit unions in terms of interest rates for savings accounts.
Interest rates for loans from banks tend to be higher than interest rates charged by credit unions.
Banks can offer an impersonal in-person banking experience.

Are Banks or Credit Unions Safer?

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts.

The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions. Nine banks have failed in the past three years, and all were insured. Ten credit unions failed, merged or went into conservatorship in 2025, and six more in the two years prior.

Beyond the insurance issue, credit unions are considered safer than banks because they tend to take fewer risks and adhere to conservative investment principles. In part, that’s because credit unions are nonprofits whose owners are their members, whereas banks are for-profit entities whose owners are investors.