The IFCU Blog

Credit Unions vs. Banks: What's the Difference and How to Choose?

As your financial needs grow, so do your options. If you’ve been with a traditional bank but are curious about alternatives, now might be the perfect time to explore the benefits of credit unions. You may discover valuable tools for smarter spending, better banking, and greater savings.

The Credit Union Advantage

While both credit unions and banks offer a variety of financial products and services—such as checking accounts, savings accounts, loans, mortgages, and credit cards—there are key differences in what they provide. Credit unions, being not-for-profit institutions, typically offer lower fees and competitive interest rates on products like high-yield checking, loans, and credit cards.

The Benefits of a Credit Union

Credit unions, like Industrial Federal Credit Union, have one primary goal: to provide members with the right financial tools to meet today’s needs and achieve tomorrow’s dreams. They do this by offering:

• No or low fees
• Higher dividend savings rates
• Lower interest rates on loans
• Personalized member service
• A commitment to serving and investing in local communities

Credit unions focus on member satisfaction, prioritizing the needs of their members and offering more personalized service. They often provide competitive interest rates on loans and savings accounts, with more flexible lending criteria. Additionally, credit unions frequently offer financial education and counseling services to help members make informed financial decisions. While they may have fewer branches, many provide 24/7 digital and mobile banking and are part of a larger CO-OP network of branches and ATMs, allowing for nationwide banking.

Credit Unions Are Owned by the Members

A significant difference between credit unions and banks is ownership. Banks are typically for-profit entities owned by shareholders who expect to earn dividends. In contrast, credit unions are not-for-profit, member-owned cooperatives committed to the financial success of the individuals, families, and communities they serve. This cooperative structure means that credit union members are also owners, giving them a voice in how the credit union operates. Profits are reinvested into better products and services for members and their communities, resulting in lower loan rates, higher savings rates, fewer fees, and increased support for community programs.

Member vs. Customer

At a bank, you’re a customer. At a credit union, you’re a member—and an owner. This distinction means that credit union members have access to convenient services, exclusive discounts, and exceptional products. At Industrial Federal Credit Union, membership comes with numerous benefits. Find out how you can become a member today!

As a bank customer, you might find more lenient eligibility standards, but you could face higher costs due to greater account minimums or higher interest rates on loans.

Credit Unions Have Exceptional Digital Networks

Both credit unions and banks offer in-person and online banking options. While national banks have locations in most major cities, they often miss smaller communities. Larger banks might offer extended phone support hours and advanced chat integrations, but both types of institutions have a wide network of ATMs nationwide. Credit unions like Industrial Federal Credit Union provide secure and easy online and mobile banking tools to ensure you can manage your finances conveniently.

Which is Best for You?

Here are four tips for choosing the right financial institution for your needs:

1. Compare Rates: Research local credit union and bank websites for savings accounts, credit cards, or loans. A quick comparison usually shows that credit union rates and costs are more competitive.
2. Review the Fees: Read the fine print for any hidden fees, including application fees and closing costs. Typically, credit unions have fewer fees.
3. Assess Your Needs: If you want a personalized banking experience with fewer fees, a credit union may be the best option. If you travel often and prefer brick-and-mortar locations in many cities, national banks might be more suitable.
4. Community Commitment: Credit unions invest heavily in community programs, social support charities, and local schools. They also offer financial wellness programs, coaching, and hands-on approaches to financial well-being.

Choosing between a credit union and a bank ultimately depends on your short-term and long-term financial goals. Credit unions tend to offer lower rates and better member service, while banks may provide a broader range of products and services, but with varying fees, rates, and customer service.

About Industrial Federal Credit Union

Industrial Federal Credit Union is committed to providing exceptional service to individuals and small businesses. We offer youth and regular savings accounts, as well as smart checking accounts. Our members enjoy free online services, including home banking, bill pay, free credit score monitoring, and more. Your trusted credit union is dedicated to helping you achieve your dreams faster.

Explore how Industrial Federal Credit Union can be the perfect partner for your financial journey today.