Credit Unions vs. Banks: Understanding the Key Differences

When comparing credit unions and banks, both offer checking accounts, savings accounts, credit cards and loans, but the key differences come down to how they're owned and how they operate.

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Credit Unions Are Member-Owned

Banks are owned by investors, whereas credit unions are owned by their members. This ownership gives members a direct stake in the credit union's direction and in meeting members' needs.

Credit Unions Are Not-for-Profit Cooperatives

Banks and credit unions are structured differently — banks focus on shareholder returns, but credit unions are not-for-profit cooperatives that can offer members competitive fees and interest rates, as well as reinvestment in the community.

Banks vs. Credit Union Product Offerings

In order to determine which type of financial institution is better suited to your personal financial goals, you'll need to assess the pros and cons of each. Credit unions and banks provide many of the same financial products, but the difference is often in the cost and the way those products are structured.

  • Everyday Accounts: Banks are open to the general public and don't require membership to open an account. Credit unions require membership established with a savings account, and they tend to offer competitive fees and straightforward requirements on checking accounts and savings accounts.
  • Credit Cards: Banks may focus on maximizing rewards with their credit cards, while credit unions often emphasize member needs and value with theirs.
  • Loans and Mortgages: Some banks might offer more products, but a credit union can provide competitive rates and excellent service, whether you're shopping for auto loans, home loans or a home equity line of credit (HELOC).
  • Business Accounts: Credit unions support local businesses through business account products that help members manage cash flow, access credit and grow sustainably.

Credit Unions Are Regulated by the NCUA

Your money is protected similarly to the way it would be at a bank. Deposits at credit unions are insured by the National Credit Union Administration (NCUA) for up to $250,000 per ownership category. This is comparable to FDIC insurance at banks.

Financial Education and Member Resources

One of the biggest differences between credit unions and banks is credit unions focus on helping members improve their financial health. Credit union members may have access to free resources and personalized support designed to make managing money easier.

Advantages of Credit Unions

When considering the pros and cons of credit unions, the advantages often include low fees, strong community ties, and a members-first focus. The “con” for some is that credit unions have specific membership requirements, under the law, compared to banks.

Membership Requirements for Credit Unions

Unlike banks, credit unions have specific eligibility rules. These credit union membership requirements are designed to serve a defined community, such as people who live in a certain area, work for a particular employer, or belong to an affiliated organization. At BECU, joining is simple. You can check BECU membership eligibility online to see if you qualify. Once eligible, becoming a member is as easy as opening a checking and savings account, which establishes your ownership in the credit union.

The Bottom Line: What's the Difference Between a Credit Union and a Bank?

When comparing banks and credit unions, both provide similar financial services, but credit unions are built to serve members, not shareholders. BECU provides resources that go beyond the typical products you'd find at a bank. They reflect our mission to help members build stronger financial futures.

  • Financial Health Check: Connect with a certified financial coach for a personalized session that reviews your budget, savings goals and credit. You can even schedule your free Financial Health Check online and join with our Video Banking option.
  • Free Seminars and Webinars: From first-time homebuying to managing credit, BECU offers free educational sessions to help you make informed financial decisions.
  • Online Resources: Access financial education articles, calculators, and tools that provide guidance on everyday money management.

BECU members often enjoy:

We're also part of 3,500 credit unions across the nation that offer 5,600 shared branches. Members can enjoy access to more than 77,000 surcharge-free ATMs nationwide.

Opening an account only takes a few minutes.

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Credit Union FAQs

Yes. Credit unions are regulated financial institutions. At BECU, member deposits are federally insured by the National Credit Union Administration (NCUA) up to $250,000 per ownership category.

Credit unions and banks offer the same level of protection for your deposits. Banks are insured by the FDIC, while credit unions are insured by the NCUA. Both cover up to $250,000 per owner, so your money is equally safe in either institution.

It depends on your needs. Banks may offer larger national networks with more branches, whereas credit unions can often offer competitive rates and few fees.

Many members prefer credit unions because they are not-for-profit and member-owned. That structure allows credit unions to return value to members through lower fees, higher savings rates, and benefits such as financial education and exclusive member discounts.

Joining a credit union is straightforward. Once you meet the membership eligibility requirements, you can apply for an account online or in person. Unlike applying for a loan or credit card, there isn't a lengthy approval process to become a member.

You may not need a specific credit score to join a credit union. Membership eligibility is based on criteria such as where you live or work, not your credit history. However, your credit score will be considered when applying for loans or credit cards after you join.

Each credit union has its own eligibility requirements. At BECU, you can check membership eligibility quickly online to see if you qualify.

Joining a credit union is simple. If you meet the eligibility requirements, you can complete an application online or visit a location. Once approved, you'll open a savings account to establish membership.

Many credit unions keep fees low or eliminate them altogether. For example, BECU offers checking accounts and savings accounts with no monthly maintenance fees.

Yes. Credit unions provide the same level of deposit protection as banks, but through the NCUA instead of the FDIC. Both insure deposits up to $250,000 per ownership category.

NCUA insurance protects deposits at federally insured credit unions. FDIC insurance protects deposits at banks. Both types of insurance are backed by the U.S. government and cover up to $250,000 per ownership category, offering the same peace of mind.