Are Credit Unions As Good As Banks? How Do They Compare?

At first glance, banks and credit unions look alike. Both offer checking and savings accounts, loans, credit cards, and certificates of deposit. But the difference lies in their structure.

Credit unions are cooperative financial institutions owned by their members — the people who use their services. Instead of aiming to generate profits for shareholders, they return earnings to members in the form of lower loan rates, reduced fees, and sometimes higher savings rates.

Membership is typically based on a “common bond.” This can mean working in a certain profession, living in a specific area, or being related to someone who is already a member. In practice, eligibility requirements are broad, and many people can qualify without difficulty.

Like banks, credit unions are safe. Deposits are insured up to $250,000 per account by the National Credit Union Administration (NCUA) (unless you happen to be in one of these states that allow credit unions NOT to be NCUA insured), just as banks are covered by the Federal Deposit Insurance Corporation (FDIC).