SIFE Financial Corner

Banks vs. Credit unions

There is a substantial difference between a bank and a credit union. However, some do not understand the difference.

Banks

A bank is a for-profit institution that holds money, invests it and turns a profit.

Banks offer solutions for financial needs, including different types of accounts to deposit money, credit cards, online banking and loans.

Most banks also have multiple locations and ATMs.

Like any business, a bank’s main priority is to keep shareholders and investors happy by earning a profit through a variety of investing activities.

Credit unions

A credit union is a nonprofit entity that pools members’ money to provide loans and services to other members.

Customers must qualify to join, with qualifications varying from occupation to the community in which ones lives

A credit union tailors for members as opposed to seeking a profit for the institution.

Members often have voting rights like bank shareholders.

They also enjoy higher interest rates for savings and lower fees for borrowing.

Although credit unions are also viewed a having more personal customer service since they are usually smaller than banks and more local, they lack the convenience of multiple locations and financial options that larger banks have.

The SIFE Financial Corner is created by members of UMKC Students in Free Enterprise.

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