Credit Unions vs. Banks

When opening up a new banking account, people should definitely consider going with a credit union instead of a traditional bank. Credit unions offer services similar to traditional banks. The main difference between the two is that credit unions are non-profit cooperatives whereas banks are for profit corporations who have a responsibility to their shareholders to make money.

This difference in structure results in credit unions being able to offer more favorable borrowing terms to their members. For car loans, the average interest rate from a credit union is around 3.5% and the average interest rate from a bank is around 4.9%. For home-equity lines of credit, credit union rates are around 4.4% and bank rates are around 4.7%. These differences in interest rates can save you hundreds, if not thousands of dollars over the life of your loan.

The main disadvantage of a credit union is that they are more localized and probably do not have as many accessible branches when compared to banks, afterall most banks are now super-banks with locations nationwide. However, most credit unions have networks set up with other credit unions allowing you access to ATMs and other services when you cannot go to you local branch.