Difference between Local Banks and Credit Unions

Choosing a financial institution for keeping the hard-earned money is very crucial especially for those who just received their first salary. Although a bank is known as a reliable and strong financial institution, it has different limits which a local banks and insurance can offer. It may sound that credit union is much better but it depends on how a person wants his finances to be managed by the financial institution.

Here are some noticeabledifferences between the local banks and credit unions.

For-Profit vs Non-profit Organization

Banks are for-profit organizations while the credit union is the non-profit organization. For-profit organizations exist to make money especially for the stockholders. On the other hand, the credit union exists to make profits for its members because the members own this financial institution. This financial institution aims to provide the needs of its members which results in low interest rates in loans and credit cards and high interest rates in savings accounts. Most of the time banks offer the opposite.

ATMs

Banks win when it comes to ATM service. Since banks have bigger networks they are able to produce more ATMs around the country which means that its clients do not need to pay for extra charges for every withdrawal made. However, some credit unions require its members to use a third party ATM which may add extra charges for their transaction.

Eligibility Requirement

Banks score again in this category. This financial constitution welcomes all potential depositors with age at least 18 years old. They also allow students to open an account without paying a membership fee. Credit union based its approval through the family member’s eligibility, place of residence and the applicant’s employer.There are some credit union which requires its applicants to pay a membership fee.

Reference taken from here http://www.financialscope.net/