When you are looking to save or borrow money you have two primary options: working with a bank or a credit union. Although banks and credit unions offer very similar services, they differ significantly. For example, credit unions are non-profit lenders while banks operate as a business. Before making a decision, you should carefully consider which is the best option for you.
Credit Union Pros
When you bank with a credit union, you are not just a customer, you are also an owner. This means that when a credit union makes a profit, you will receive a share of those profits. Additionally, as a part owner of a credit union, you have the ability to influence it. If you have an opinion on how things should be run, you have the right to voice your concerns and vote at the credit union's general meeting.
Credit Union Cons
Credit unions may offer you the ability to profit from your banking and to influence the organization, but it is not always as secure as using a bank. The Federal Deposit Insurance Corporation insures your savings in a federal credit union, but a small, local or regional credit union may not be covered by the FDIC. If your savings with a credit union are not insured, it is possible to lose all of your money if the organization goes bankrupt. When investing with a credit union that is not federal in scope, you should verify that your savings are insured.
The key advantage that banks offer over credit unions is they are typically larger organizations capable of offering more far-reaching services. Additionally, many banks operate nationally and even internationally. For people travelling extensively or doing international business, a bank typically offers better services. Additionally, many credit unions charge membership dues, but banks do not. With a bank you will typically pay only for the services or service packages that you use, but you will not need to pay an annual fee simply to belong to the bank.
The biggest disadvantage of using a bank versus a credit union is that a bank is a "profit" corporation. This means that they are interested in making a profit off you as a customer and that any of these profits go to the bank's owners, not to you. Additionally, banks may be reluctant to offer you the personalized service that you require because you are only a customer and not a shareholder -- and a bank's primary duty is to its shareholders.