Credit Unions vs. Banks

Pondering the difference between a credit union vs. a bank? You’re not the first one — too few people understand what separates these two financial institutions, let alone the ways that a community bank differs from a larger bank.

The Difference Between Credit Unions and Banks

The fundamental difference is that banks are for-profit enterprises while credit unions are nonprofits. A credit union will usually exist solely to service a community of people — the catch is that membership is limited, and will usually be based around a location, faith, employer, or membership in another organization. 

Banks tend to be larger and exist both to be of service to the community and create profits. Easy enough — so which one should you use?

Pros and Cons of Credit Unions vs. Banks

Credit unions do come with some attractive advantages. Visit a credit union and a national bank in Fairview Heights or Bloomington and you might find better rates on some of the services they do offer. 

However, banks are popular for a reason. They offer a wider array of financial products than credit unions and tend to have more locations to increase convenience and accessibility. Credit unions typically have poor online services, while banks often offer powerful online finance tools. If you're with a credit union, you may need to visit your nearest location instead of just sorting things on your computer.

The Benefits of Using a Community Bank

If you’re struggling to decide between bank and credit union, a community bank is probably right up your alley. These are small and local. If you deposit money at a community bank in Decatur it’s probably going to be used to underwrite a home in Decatur and not somewhere outside central Illinois. 

Beyond putting your money to work in the local economy, community banks generally offer the same services with better interest rates and terms than larger banks. Since deposits are turned into loans instead of put towards speculative trading, community banks don’t promote risky investing, either.

Learn More About the Benefits of Community Banks

If you’d like to find out more about how smaller banks serve communities, just take a look at Town and Country Bank and Peoples Prosperity Bank. For any financial assistance or help switching banks, just reach out online or visit your local branch.