Are you wondering whether to go with a bank or credit union for your business account? Before making your choice, you should understand the differences between them to help decide which option is best for your small business.
In this article, you'll learn about the differences between a credit union or bank for business account. We’ll also show you an exciting alternative to both of these options: a Wise business account.
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Credit Union vs Bank for Small Business Accounts
To make an informed decision about which financial institution to use for your small business, it's important to understand the differences between credit unions and banks. Members own the credit unions they are a part of and operate them as not-for-profit entities. Banks are for-profit organizations that are often part of a larger network.
Credit unions provide a more personalized experience for their members. They focus on their members’ needs and interests. This often results in better customer service and lower fees. Yet credit unions have specific requirements for membership. This can make it more difficult to open an account.
Despite these challenges, credit unions can offer significant benefits for small businesses. These include:
- lower interest rates on loans
- higher interest rates on savings accounts
- more flexible lending requirements
Banks offer a wider range of account options and services, as well as more extensive networks of ATMs and branches. Small business owners should consider the fees and interest rates associated with each account type before making a decision.
So the decision between using a credit union or a bank for your small business will depend on your specific needs and preferences. By weighing the pros and cons of each option, you can make an informed decision that will benefit your business in the long run.
Fees
Credit unions usually have cheaper options because they don't focus on making profits. Banks often charge higher fees for things like wire transfers or overdrafts because their goal is to make as much money as possible.
But you should make sure to remember that fees can be very different from one place to another. That's why you need to do research and compare rates and fees at different banks and credit unions in your area before making any decisions about your money.
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Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks.
Range of Services
Banks could be a better choice for your small business as they offer a wider range of options such as business loans and merchant accounts. Credit unions have fewer services available. But they may still be able to provide help on a case-by-case basis.
Credit unions might not have access to all the same tools as banks. But they could still provide personalized and flexible solutions. You should understand your business's unique requirements and preferences to decide which financial institution to work with.
Interest Rates
Credit unions have an advantage over banks when it comes to interest rates. Unlike banks, credit unions aren't profit-driven. Some banks offer higher rates on certain accounts. But these often come with balance requirements or fees for services.
In short, banks have extra fees and restrictions. Credit unions have competitive interest rates with no strings attached.
Community Benefits
By opening an account with a credit union, you don't get financial services only - you become a member of a community. This community offers exclusive benefits and discounts. This is a great advantage for small businesses because they often have limited funds.
Credit unions focus on community engagement. They offer unique benefits that can help local businesses succeed. Banks are usually more focused on the bottom line. But members of a credit unions support each other. By joining a credit union, you become part of a supportive community. Credit unions offer financial resources and their members commit to helping each other thrive.
Member-Owned
Financial cooperatives like credit unions operate under the principle of member ownership. In other words, each member has a say in how the union operates and puts profits back into the business to improve services and benefits for everyone.
This sets credit unions apart from banks. Banks have to cater to shareholders, so they do what is in their best interest. Credit unions focus on customer service and satisfaction over everything else. They offer a community-oriented and customer-focused financial institution. If this is what you're looking for, credit unions are for you.
Network of Branches & ATMs
When deciding where to put your money, business owners should think about how easy it is to access your funds. Banks usually have more branches and ATMs than credit unions. This can be helpful if you need to get cash no matter where you are.
Credit unions offer benefits like lower ATM fees or refunds for using non-affiliated machines instead. It's important to consider both the advantages and disadvantages of each choice. Make sure you pick the one that fits your financial needs and preferences the best.
Reputation
Choosing the right financial institution requires considering their reputation. Credit unions usually provide better customer service since they have a smaller scale and customer base.
Banks have more experience and regulatory measures in place to ensure your funds and business' safety and security. But they may have slower response times and lower quality customer service. You should weigh all these factors before making a decision.
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Are credit unions good for business accounts?
Any small business owner looking for the right banking options should take time to consider their choices. Credit unions are an alternative that offers several benefits over traditional banks.
They charge lower fees and offer higher interest rates on savings accounts and loans. This can save your business money in the long run. Additionally, credit unions often provide more flexible loan options. They try to tailor these to your specific needs.
It's important to note that credit unions may not offer the same range of services as banks. This includes wealth management or investment advice. If your business requires a more comprehensive banking experience, a bank may be a better choice.
Also, keep in mind that credit unions may have exclusive membership requirements. This could mean you aren’t eligible to join. It's crucial to assess your business's individual banking needs before making a final decision. You should also check out all local banking options. This way, you can choose the best banking option for your business that is available to you.
Best bank or credit union for small business accounts
Now that you understand all the basics of banks and credit unions, let's take a look at some specific options. Here are some credit unions and banks found throughout the U.S. that may be helpful to you and your small business.
Popular Credit Unions
Navy Federal Credit Union (NFCU) offers a wide variety of services and solutions for businesses, including:
- business checking and savings accounts
- business credit cards
- business loans¹
NFCU is only open to members of the U.S. military, so this is not an option for business owners outside the armed forces.
Boeing Employee’s Credit Union (BECU) has very few eligible members. They include businesses in Washington, Oregon, or Idaho associated with Boeing or its partners³. When it comes to business banking, BECU offers:
- business checking and savings accounts
- business credit cards
- business loans
- cash management solutions²
Digital Federal Credit Union (DCU) is a great option for eligible members, which includes those connected to the union through:
- family
- business
- organization
- community⁴
DCU offers free business checking accounts with no minimum balance, as well as business savings accounts⁵.
See the Best Banks for Small Businesses >>
Notable Small Business Accounts
Bank of America has a lot of benefits tailored to small business banking, such as:
- business checking accounts
- business debit cards
- business savings and certificates of deposit (CDs)
- trademarked Balance Connect for overdraft protection
They also offer small business resources and payroll solutions, as well as general business help with:
- credit cards
- financing
- investing and retirement
- cash management⁶
Chase does not offer small business banking, but they have many popular offerings through Chase for Business, like:
- business savings accounts
- business checking accounts
- free consultations with a Payments Advisor
- a knowledge center full of helpful information
Other business offerings include:
- business credit and debit cards
- business loans
- retirement plans⁷
Wells Fargo is another bank that offers services tailored to small business owners, like:
- checking accounts
- savings & CDs
- credit cards
- merchant services
- lines and loans
- payroll services
- business resources
They also have a convenient mobile app integrated with Zelle to make banking with them convenient and accessible⁸.
Another Option: Wise for International Business
Banking with a credit union or a traditional bank is a great option for small businesses. But they also have plenty of drawbacks, like high fees, limited services, and restricted membership. Luckily, Wise offers comprehensive and innovative banking solutions.
Wise serves 300k business every quarter in markets all over the world. A Wise account offers the chance to send and receive international payments in multiple currencies.
Whether an instance one-time payment or batch payment, Wise offers competitive rates to customers with the mid-market exchange rate.
- The Wise API and Batch Payments come with account - no need to pay extra for these key features
- Multi-level permissions and alerts gives you complete control over your account
- Link your accounts with top accounting systems: QuickBooks, Wave, Sage, and Xero
- US businesses get local account details in 9 currencies to receive funds after paying a one-time fee
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Over 300,000 businesses use Wise every quarter
Learn More: Alternatives to Alliant Credit Union for Business
Please see Terms of Use for your region or visit for the most up to date pricing and fee information.
Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks.
Sources:
- Navy Federal Credit Union: “Business Solutions” - https://www.navyfederal.org/services/business.html
- BECU: “Business Banking Menu” - https://www.becu.org/
- BECU: “Business Membership Elligibility” - https://www.becu.org/business-banking/business-eligibility
- DCU: “Member Elligibility” - https://www.dcu.org/membership/member-eligibility.html
- DCU: “Business Banking Services - Offerings” - https://www.dcu.org/bank/business-services.html
- Bank of America: “Site Map - Small Business” - https://www.bankofamerica.com/information/smallbusiness/
- Chase: “Chase for Business” - https://www.chase.com/business
- Wells Fargo: “Small Business” - https://www.wellsfargo.com/biz/
- Trust Pilot - Wise - https://www.trustpilot.com/review/wise.com
*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information. This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional. We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
