Credit Unions vs. Banks - Why Choose One Over the Other? (2024)

Ever wondered what the differences are between a credit union and a bank? Why credit unions are able to provide way lower rates than their big bank counterparts? Many people think credit unions and banks are one and the same, but there’s actually more to it than meets the eye. Suffice it to say, credit unions and banks are far from being one and the same.

1. Structure

The fundamental difference lies in the fact that banks are run as for-profit enterprises, whereas credit unions are nonprofit. Credit unions are also member-owned and all members have a say in how the business is run. Members are also usually allowed to participate in planning meetings and are always allowed to vote to elect a Board of Directors.[1].

While it’s true that any person can open an account with a traditional bank, credit unions are special in that they only serve defined geographic areas, employee groups, associations, religious or fraternal affiliations.

Find out more about how you can become a member at Empeople and membership benefits.

2. Rates and Fees

High fees can be a frustrating aspect of having an account with a bank. With an enhanced, strong bottom line holding such a prominent place within banks, banks can have higher fees, lower rates on deposits, and higher interest rates on loans.[2].

On the other hand, credit unions are obliged to reinvest their income toward programs in order to qualify for nonprofit, tax-exempt status. Profits are not necessarily a priority for credit unions, however profits are used to allow us to reinvest back into our technology and memberships in the form of higher rates on deposits and lower interest rates on loans.

Check out some of Empeople’s market rates.

3. Customer Service

Since banks are for-profit institutions, they typically have lower incentive to provide the best customer service. Many banks are huge national or global institutions and providing a warm and welcoming environment isn’t a top priority for them. It’s often said that credit unions sport friendlier and personalized customer service with a focus on being a community and a member-first business.[2] How would you feel when you walk through the doors and a staff member greets you by your first name?

4. Location & Network

This is where the convenience of traditional big banks shine. Since their reach is often nationwide or global, it’s hard to match the scale of their branches and network. Hop off to any part of the country (or even overseas) and you’re bound to find a branch or affiliate partner.[1]

If you’re part of a credit union, we make it just as easy! With today’s advancement in technology, going to a physical branch is becoming less of a necessity. What’s cool is that you can meet your banking needs anywhere there is an internet connection. We make banking so easy, you’d never have to start your car, sit in traffic and wait in line just to deposit a check.

What’s more? Our Empeople customer service team is readily available to assist you 24/7 from any device. We actually get live representatives on the phone to help you, rather than having you frustratingly navigate through pre-recorded voice response systems.

5. Technology

Since big banks are able to expand quickly on a national and global scale, their budget allows for research and development towards better technology to serve their customers.[2]

However, in today’s hyper-connected world, the technological gap between the big and small players is closing fast. Today’s credit unions offer many of the same high-tech benefits that big banks offer, such as:digital banking, mobile wallets, mobile deposits, fraud alerts and much more.

At Empeople, we pride ourselves by being equipped with the latest technology to make banking with us a breeze from any device, anywhere you go.

In summary, here is a simple credit union vs. banks differences chart:

AspectsBanks Credit Unions
Structure For-ProfitNon-Profit
Rates & Fees Lower rates on accounts; higher rates on loans and credit cardsHigher rate on accounts; lower rates on loans and credit cards
Customer Service ImpersonalFriendlier, better.
Location & Network National or globalMajority local, with some on national scale
Technology Highly advancedModerately advanced


The decision to go with a bank or a credit union is dependent upon for what you’re looking. People choose banks primarily because of the convenience of multiple branches across the country, along with better technology. On the flip side, people choose credit unions primarily because of discounted loan rates, higher interest rates and better customer service. So if you’re looking for great savings along with an attentive and personalized service to help you through life’s many milestones, credit unions are the way to go!

Don’t just take our word for it. Here is real feedback and comments from our members:

Empeople has always been, hands-down, the best I have experienced with banking. They have always answered any questions and assisted in any way they could to make my loans simple and easy with great rates that the banks can’t compete with. I trust using the credit union for 12 years now and would highly recommend them to any one of my fellow employees.” – Chad

“I was a first time buyer and was hesitant about making the move to buy my first car. I enjoyed the personalized service I received with Empeople. I always feel like Empeople has my best interest in mind. ” – Deborah

Becoming a member at Empeople is simple and easy using our online application. Once you’re approved, you are a member for life. Have peace of mind knowing that you’ll be getting the best market rates along with the best service for all your banking needs.


[1] SmartAsset – Credit Union vs. Bank: How Are They Different?

[2] TheStreet – Credit Unions vs. Banks: What’s the Difference?

Credit Unions vs. Banks - Why Choose One Over the Other? (2024)


Credit Unions vs. Banks - Why Choose One Over the Other? ›

Credit unions can be ideal for a low-interest loan, lower mortgage closing costs, or reduced fees, but you'll need to qualify for membership. Larger banks may offer you more choices regarding products, apps, and international or commercial products and services, and anyone can join.

Why do people prefer credit unions over banks? ›

People choose banks primarily because of the convenience of multiple branches across the country, along with better technology. On the flip side, people choose credit unions primarily because of discounted loan rates, higher interest rates and better customer service.

What are three big differences between banks and credit unions? ›

Credit unions and banks offer some similar services but work on a different business model.
BanksCredit unions
No membership requiredMembership required
Generally lower savings rates and higher feesOften higher savings rates and lower fees
May be national or localMay be national or local
3 more rows
Jul 10, 2023

Why credit unions are safer than banks? ›

However, because credit unions serve mostly individuals and small businesses (rather than large investors) and are known to take fewer risks, credit unions are generally viewed as safer than banks in the event of a collapse.

What is a potential disadvantage of choosing a credit union over a bank? ›

With a credit union, you might have to do some extensive research to compare accounts and find out what services they offer. Credit unions only serve certain groups of people and if the ones you can join don't have mobile banking or their apps aren't up to par, that could potentially be a major disadvantage.

What is the downside of a credit union? ›

Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.

What is the biggest advantage to a credit union? ›

The main benefits of a credit union vs. a bank are that credit unions tend to offer better rates and customer service, lower fees, and a national network of ATMs.

What are the pros and cons of banks vs credit unions? ›

If you want higher deposit rates and don't need access to branches across the country, for example, you might prefer a credit union. If you want access to in-person services and don't mind lower interest rates, a bank might be more suitable.

Is a credit union safer than a bank? ›

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.

Are credit unions safer than banks during recession? ›

bank in a recession, the credit union is likely to fare a little better. Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money.

Are credit unions safe if banks crash? ›

The NCUA insures depositors' funds up to the same threshold as the FDIC, $250,000. Just like banks, deposits above the $250,000 mark at credit unions are uninsured, But unlike banks, credit unions do not have the same level of risk exposure to the factors that took down SVB and other troubled lenders.

What happens to credit unions when banks collapse? ›

If the bank fails, you'll get your money back. Nearly all banks are FDIC insured. You can look for the FDIC logo at bank teller windows or on the entrance to your bank branch. Credit unions are insured by the National Credit Union Administration.

Do credit unions fail as often as banks? ›

Experts told us that credit unions do fail, like banks (which are also generally safe), but rarely. And deposits up to $250,000 at federally insured credit unions are guaranteed, just as they are at banks.

What are 3 pros and 3 cons for credit unions? ›

The Pros And Cons Of Credit Unions
  • Better interest rates on loans. Credit unions typically offer higher saving rates and lower loan rates compared to traditional banks. ...
  • High-level customer service. ...
  • Lower fees. ...
  • A variety of services. ...
  • Cross-collateralization. ...
  • Fewer branches, ATMs and services. ...
  • The biggest negative.
Oct 4, 2022

Which credit union is considered the best? ›

Compare the Best Credit Unions
Financial InstitutionWhy We Picked It
Blue Federal Credit UnionBest Overall
Liberty Federal Credit UnionBest for Checking
Alliant Credit UnionBest for a Savings Account
Service Credit UnionBest for Military Individuals & Families
1 more row

Are credit unions riskier than banks? ›

Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.

Why do people go to credit unions? ›

Credit unions operate to promote the well-being of their members. Profits made by credit unions are returned back to members in the form of reduced fees, higher savings rates and lower loan rates.

What is the biggest difference between a bank and a credit union? ›

The main difference between the two is that banks are typically for-profit institutions while credit unions are not-for-profit and distribute their profits among their members. Credit unions also tend to serve a specific region or community.

Why are credit unions so safer? ›

Credit unions are backed by the National Credit Union Share Insurance Fund (NCUSIF), which is equivalent to the Federal Deposit Insurance Corporation (FDIC) for banks. This safety net guarantees your funds, typically up to $250,000 per depositor, should any unexpected turbulence occur.


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