Why Credit Unions Are Different Than Banks?

When it’s time to establish a personal financial account, consumers have two main choices at their disposal. Traditional banking institutions and credit unions both provide the financial vehicles required to run households, establish credit and save toward personal goals. However, they do differ by design. Understanding those differences can help consumers make the best choices to meet their specific needs.

Credit unions are not-for-profit cooperatives that are technically owned by each member who has a "share" in the establishment. Money placed in deposit accounts, such as checking or savings, earns membership privileges. Banks, on the other hand, are for-profit corporations that exist to make money. Often publicly traded and subject to the desires of shareholders, this type of financial institution is driven by an entirely different overarching mission.

While banks and credit unions offer their own advantages, personal account holders are likely to find these benefits of credit unions make them a sound choice:

• The level of service they can provide – Credit unions tend to be geographically centered and locally run. Since they are member driven, their level of service tends to be highly personalized. This can offer tremendous advantages for individuals who are working to attain personal financial goals.
• The lower interest rates they charge – Since credit union profits are returned to members in the form of services, these institutions often charge lower rates on borrowed money. From interest savings on credit card accounts to more generous mortgage loan terms, credit union members tend to pay a great deal less over the long run for money borrowed.
• The higher return on investments – Credit unions often pay higher interest rates on deposit accounts. That can add up to significant difference on savings earnings over traditional banks.

Credit unions and banks each offer their own unique advantages, but they are different by design. Individuals seeking personalized service and financial products meant to benefit them directly may find credit unions are better positioned to serve them.

Serving our community since 1931, a href=https://www.cutx.org/About-UsCUTX is owned by its members and operated in accordance with the laws governing credit unions in the State of Texas.