Managing your finances is important. Everyone needs help sometimes with opening savings accounts, getting a loan, or asking a financial advisor for advice. Banks and credit unions are two institutions available that can help you with your finances. But before you sign up for one of these programs, you should know about the differences between the two.
What Is a Credit Union?
Everyone’s familiar with banks and their services, but what is a credit union, and what can they offer?
Credit unions are not-for-profit organizations that strive to help individuals with their financial endeavors. The employees at credit unions are more involved in their member’s service needs and offer lower costs. You can open savings accounts, apply for loans, use credit and debit cards, and invest in CDs.
Advantages and Disadvantages of Credit Unions
Credit unions provide some of the lowest interest rates available on loans. This makes repaying loans to a credit union lender more affordable. In addition, when it comes to opening savings accounts, credit unions have higher interest rates than banks, so members can earn more money by holding it in the account.
A downside to credit unions is they’re less accessible than banks. They typically serve local or regional areas. This means that you may need to work or live in that determined area to use the credit union’s services.
What Is a Bank?
It may seem like an obvious answer, but there’s a lot that you should understand about banks before opening an account or applying for a loan.
Banks are for-profit organizations that typically have several branches across an area or the country. One of the disadvantages customers find when opening accounts with banks is that the company focuses on making a profit rather than genuinely helping its customers.
Advantages and Disadvantages of Banks
The abundance of branches makes it easier to visit physical locations and take money out at ATMs. They also offer a wide variety of services, like checking and savings accounts, retirement accounts, loans, and mortgage services.
When it comes to signing up with a bank for services, there are a couple of disadvantages to acknowledge. Banks have additional fees at higher costs, like monthly fees for accounts, overdrafts, and ATM usage. Another disadvantage is most banks establish higher interest rates, which makes monthly payments more costly for customers.
Understanding the differences between credit unions and banks will help you make the right decision to manage your money. With fewer monthly fees and lower interest rates, credit unions are a desirable option for financial assistance. Democracy Federal Credit Union is here to serve you for all your immediate and future financial needs.