When it comes to personal finance, where you bank matters. Finding the right financial institution can help you save money as well as become a good money manager. The first step in the decision of where to bank is knowing the differences between a traditional bank and a credit union.
Banking at the right place can give you peace of mind knowing that your funds are secure and that you have a trusted financial partner by your side. When searching for financial institutions, review their product offerings, interest rates, the fees imposed, their online, mobile and other digital services and the ease of access to your money. The location of branches is important, especially if you intend to make in-person visits to do your banking.
Difference Between Banks and Credit Union
The main difference between traditional banks and credit unions is that banks are for-profit and credit unions are not-for-profit cooperatives. This means the primary focus of banks is to make money for shareholders who own stock in the company.
To accomplish this, banks typically charge higher fees, offer lower yields on deposits and impose higher rates on loans to their customers. In contrast, credit unions return profits to their members by providing members with lower fees, higher rates on deposits and lower rates on loans.
How these two types of financial institutions are governed is also different. Credit unions have unpaid volunteers who are elected to serve as their Board of Directors. Banks have paid Boards who are looking to increase profits for shareholders. Credit union members have a vote in their credit union’s board elections. Bank customers don’t get a vote in their bank’s board elections unless they’re also a shareholder.
Anyone can generally open an account at a bank, while credit unions have membership requirements that vary by the type of membership they serve. For example, there are credit unions that serve employees of a certain companies (such as UCU serving the University of California system) and those that serve geographic communities (such as Travis Credit Union).
Choosing a Bank
If you prefer a traditional bank, you’ll be glad to know that bank deposit accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). As stated earlier, anyone can visit a bank and open an account, giving you the flexibility to select one with branches or offices near you. There were 4,796 federally insured banks in the first quarter of 2022*.
If branch locations are not as important and you prefer to bank online, banks do sometimes offer comprehensive mobile banking apps*.
Choosing a Credit Union
If you prefer a credit union, know that credit union deposit accounts are insured up to $250,000 by the National Credit Union Association (NCUA), a federal agency. Credit unions tend to have very similar products to banks, including checking and savings accounts, auto loans and credit cards. You’ll typically enjoy lower fees, higher yields on savings, lower rates on loans and other member-related benefits when compared to banks.
When selecting a credit union, keep in mind eligibility requirements. Also, most credit unions are part of the CO-OP ATM Network, which gives members access to more than 30,000 free ATMs across the U.S. and Canada. At the start of 2023, there were 5,288 credit unions in the U.S., according to IBISWorld.
Select Travis Credit Union
Why choose Travis CU? TCU was founded in 1951 in Fairfield, CA, and today serves everyone who lives, works, attends school or worships in 12 Northern California counties. TCU has been named one of the Best-In-State Credit Unions in California by Forbes for the past three years. Our focus is on providing value-oriented products and services, as well as financial education for our members and their communities. Financial Feedom For All is what guides us.
Travis CU is a great place to save money. Our variety of products including Certificates, Money Market Accounts, IRAs and investment services give you the financial growth and security you need. We’re also your local lender for home loans, credit cards, vehicle loans, personal loans and more.
Remember, where you bank matters, so make the most of it. Visit traviscu.org today.