Credit Union vs. Bank: What's the Difference?
Edited by Aimie Carlson || By Janet White || Published on November 7, 2023
Credit Unions are member-owned cooperatives offering financial services, while Banks are for-profit institutions providing a range of financial services.
Key Differences
Credit Unions and Banks both serve as financial institutions, but they have distinct operational structures. A Credit Union is a not-for-profit organization owned by its members, typically bound by a common bond like occupation or community. These members are both owners and customers. On the other hand, a Bank operates as a for-profit entity, owned by shareholders who expect returns on their investments. Customers of Banks do not have ownership stakes unless they also hold shares.
In terms of the services offered, both Credit Unions and Banks provide similar products, such as checking and savings accounts, loans, and credit cards. However, due to their cooperative nature, Credit Unions often return profits to members through lower fees, higher savings rates, and lower loan rates. Banks, conversely, aim to generate profits for shareholders, which can lead to higher fees and rates for customers.
Credit Unions emphasize personal relationships and community involvement. Given their cooperative model, they often possess a deep-rooted community focus, sponsoring local events and supporting local causes. Banks, especially larger ones, might have a broader, often national or international, scope, which can sometimes lead to a less personalized customer experience.
Regulatory environments also differentiate Credit Unions from Banks. Credit Unions, being not-for-profit, have specific tax advantages. They are usually regulated by different governmental agencies than Banks, with many under state jurisdictions. Banks, whether they're national or state-chartered, face a different set of regulatory standards and are generally subjected to federal and state taxation.
Lastly, while both Credit Unions and Banks employ technology to enhance customer experience, Banks, especially bigger ones, might have more advanced technological infrastructures due to larger capital resources. However, Credit Unions, given their member-centric approach, ensure their services remain accessible and competitive.
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Comparison Chart
Ownership
Owned by members.
Owned by shareholders.
Profit Orientation
Not-for-profit.
For-profit.
Primary Objective
Serve members and community.
Generate profit for shareholders.
Regulatory Environment
Often state-regulated with specific tax advantages.
State or federally regulated, subjected to federal and state taxes.
Scope & Relationship
Community-focused with personalized relationships.
Broader scope, potentially less personalized.
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Credit Union and Bank Definitions
Credit Union
Financial institution emphasizing community service and member benefits.
The Credit Union sponsored the town's annual parade.
Bank
Corporation involved in borrowing, lending, and safeguarding money.
With her paycheck, Emily visited the Bank to deposit her earnings.
Credit Union
Member-driven institution providing financial services and education.
The Credit Union held financial literacy workshops for students.
Bank
A piled-up mass, as of snow or clouds; a heap
A bank of thunderclouds.
Credit Union
Community-centric bank alternative emphasizing mutual benefits.
After experiencing high fees, Linda switched to a Credit Union.
Bank
A steep natural incline.
Credit Union
A not-for-profit financial cooperative owned and operated by its members.
John joined the local Credit Union to support community-based banking.
Bank
An artificial embankment.
Credit Union
Cooperative offering banking services with profits returned to members.
Lower loan rates were a prime attraction at the Credit Union.
Bank
The slope of land adjoining a body of water, especially adjoining a river, lake, or channel.
Bank
A large elevated area of a sea floor.
Bank
(Games) The cushion of a billiard or pool table.
Bank
The lateral inward tilting, as of a motor vehicle or an aircraft, in turning or negotiating a curve.
Bank
A business establishment in which money is kept for saving or commercial purposes or is invested, supplied for loans, or exchanged.
Bank
The offices or building in which such an establishment is located.
Bank
The funds of a gambling establishment.
Bank
The funds held by a dealer or banker in certain games, especially gambling games.
Bank
The reserve pieces, cards, chips, or play money in some games, such as poker, from which the players may draw.
Bank
A supply or stock for future or emergency use
A grain bank.
Bank
(Medicine) A supply of human fluids or tissues, such as blood, sperm, or skin, that is stored in a facility for future use.
Bank
A place of safekeeping or storage
A computer's memory bank.
Bank
A set of elevators.
Bank
A row of keys on a keyboard.
Bank
A bench for rowers in a galley.
Bank
A row of oars in a galley.
Bank
(Printing) The lines of type under a headline.
Bank
To border or protect with a ridge or embankment.
Bank
To pile up; amass
Banked earth along the wall.
Bank
To cover (a fire), as with ashes or fresh fuel, to ensure continued low burning.
Bank
To construct with a slope rising to the outside edge
The turns on the racetrack were steeply banked.
Bank
To tilt (an aircraft) laterally and inwardly in flight.
Bank
To tilt (a motor vehicle) laterally and inwardly when negotiating a curve.
Bank
(Games) To strike (a billiard ball) so that it rebounds from the cushion of the table.
Bank
(Sports) To play (a ball or puck) in such a way as to make it glance off a surface, such as a backboard or wall.
Bank
To rise in or take the form of a bank.
Bank
To tilt an aircraft or a motor vehicle laterally when turning.
Bank
To deposit in a bank.
Bank
To store for future use.
Bank
To transact business with a bank or maintain a bank account.
Bank
To operate a bank.
Bank
To arrange or set up in a row
"Every street was banked with purple-blooming trees" (Doris Lessing).
Bank
(countable) An institution where one can place and borrow money and take care of financial affairs.
Bank
(countable) A branch office of such an institution.
Bank
(countable) An underwriter or controller of a card game.
Bank
(countable) A fund from deposits or contributions, to be used in transacting business; a joint stock or capital.
Bank
The sum of money etc. which the dealer or banker has as a fund from which to draw stakes and pay losses.
Bank
Money; profit.
Bank
(countable) In certain games, such as dominos, a fund of pieces from which the players are allowed to draw.
Bank
A safe and guaranteed place of storage for and retrieval of important items or goods.
Blood bank; sperm bank; data bank
Bank
(countable) A device used to store coins or currency.
If you want to buy a bicycle, you need to put the money in your piggy bank.
Bank
(hydrology) An edge of river, lake, or other watercourse.
Bank
An elevation, or rising ground, under the sea; a shallow area of shifting sand, gravel, mud, and so forth (for example, a sandbank or mudbank).
The banks of Newfoundland
Bank
(geography) A slope of earth, sand, etc.; an embankment.
Bank
(aviation) The incline of an aircraft, especially during a turn.
Bank
(rail) An incline, a hill.
Bank
A mass noun for a quantity of clouds.
The bank of clouds on the horizon announced the arrival of the predicted storm front.
Bank
(mining) The face of the coal at which miners are working.
Bank
(mining) A deposit of ore or coal, worked by excavations above water level.
Bank
(mining) The ground at the top of a shaft.
Ores are brought to bank.
Bank
A row or panel of items stored or grouped together.
A bank of switches
A bank of pay phones
Bank
A row of keys on a musical keyboard or the equivalent on a typewriter keyboard.
Bank
(computing) A contiguous block of memory that is of fixed, hardware-dependent size, but often larger than a page and partitioning the memory such that two distinct banks do not overlap.
Bank
(pinball) A set of multiple adjacent drop targets.
Bank
A bench, as for rowers in a galley; also, a tier of oars.
Bank
A bench or seat for judges in court.
Bank
The regular term of a court of law, or the full court sitting to hear arguments upon questions of law, as distinguished from a sitting at nisi prius, or a court held for jury trials. See banc
Bank
A kind of table used by printers.
Bank
(music) A bench, or row of keys belonging to a keyboard, as in an organ.
Bank
(uncountable) slang for money
Bank
(intransitive) To deal with a bank or financial institution, or for an institution to provide financial services to a client.
He banked with Barclays.
Bank
(transitive) To put into a bank.
I'm going to bank the money.
Bank
To conceal in the rectum for use in prison.
Johnny banked some coke for me.
Bank
To roll or incline laterally in order to turn.
Bank
(transitive) To cause (an aircraft) to bank.
Bank
(transitive) To form into a bank or heap, to bank up.
To bank sand
Bank
(transitive) To cover the embers of a fire with ashes in order to retain heat.
Bank
(transitive) To raise a mound or dike about; to enclose, defend, or fortify with a bank; to embank.
Bank
To pass by the banks of.
Bank
To provide additional power for a train ascending a bank (incline) by attaching another locomotive.
Bank
To arrange or order in a row.
Bank
A mound, pile, or ridge of earth, raised above the surrounding level; hence, anything shaped like a mound or ridge of earth; as, a bank of clouds; a bank of snow.
They cast up a bank against the city.
Bank
A steep acclivity, as the slope of a hill, or the side of a ravine.
Bank
The margin of a watercourse; the rising ground bordering a lake, river, or sea, or forming the edge of a cutting, or other hollow.
Tiber trembled underneath her banks.
Bank
An elevation, or rising ground, under the sea; a shoal, shelf, or shallow; as, the banks of Newfoundland.
Bank
The face of the coal at which miners are working.
Bank
The lateral inclination of an aëroplane as it rounds a curve; as, a bank of 45° is easy; a bank of 90° is dangerous.
Bank
A group or series of objects arranged near together; as, a bank of electric lamps, etc.
Bank
The tilt of a roadway or railroad, at a curve in the road, designed to counteract centrifugal forces acting on vehicles moving rapiudly around the curve, thus reducing the danger of overturning during a turn.
Bank
A bench, as for rowers in a galley; also, a tier of oars.
Placed on their banks, the lusty Trojan sweepNeptune's smooth face, and cleave the yielding deep.
Bank
The bench or seat upon which the judges sit.
Bank
A sort of table used by printers.
Bank
A bench, or row of keys belonging to a keyboard, as in an organ.
Bank
An establishment for the custody, loan, exchange, or issue, of money, and for facilitating the transmission of funds by drafts or bills of exchange; an institution incorporated for performing one or more of such functions, or the stockholders (or their representatives, the directors), acting in their corporate capacity.
Bank
The building or office used for banking purposes.
Bank
A fund to be used in transacting business, especially a joint stock or capital.
Let it be no bank or common stock, but every man be master of his own money.
Bank
The sum of money or the checks which the dealer or banker has as a fund, from which to draw his stakes and pay his losses.
Bank
In certain games, as dominos, a fund of pieces from which the players are allowed to draw; in Monopoly, the fund of money used to pay bonuses due to the players, or to which they pay fines.
Bank
A place where something is stored and held available for future use;
Bank
To raise a mound or dike about; to inclose, defend, or fortify with a bank; to embank.
Bank
To heap or pile up; as, to bank sand.
Bank
To pass by the banks of.
Bank
To build (a roadway or railroad) with an inclination at a curve in the road, so as to counteract centrifugal forces acting on vehicles moving rapiudly around the curve, thus reducing the danger of vehicles overturning at a curve; as, the raceway was steeply banked at the curves.
Bank
To deposit in a bank.
Bank
To keep a bank; to carry on the business of a banker.
Bank
To deposit money in a bank; to have an account with a banker.
Bank
To tilt sidewise in rounding a curve; - said of a flying machine, an aërocurve, or the like.
Bank
A financial institution that accepts deposits and channels the money into lending activities;
He cashed a check at the bank
That bank holds the mortgage on my home
Bank
Sloping land (especially the slope beside a body of water);
They pulled the canoe up on the bank
He sat on the bank of the river and watched the currents
Bank
A supply or stock held in reserve for future use (especially in emergencies)
Bank
A building in which commercial banking is transacted;
The bank is on the corner of Nassau and Witherspoon
Bank
An arrangement of similar objects in a row or in tiers;
He operated a bank of switches
Bank
A container (usually with a slot in the top) for keeping money at home;
The coin bank was empty
Bank
A long ridge or pile;
A huge bank of earth
Bank
The funds held by a gambling house or the dealer in some gambling games;
He tried to break the bank at Monte Carlo
Bank
A slope in the turn of a road or track; the outside is higher than the inside in order to reduce the effects of centrifugal force
Bank
A flight maneuver; aircraft tips laterally about its longitudinal axis (especially in turning);
The plane went into a steep bank
Bank
Tip laterally;
The pilot had to bank the aircraft
Bank
Enclose with a bank;
Bank roads
Bank
Do business with a bank or keep an account at a bank;
Where do you bank in this town?
Bank
Act as the banker in a game or in gambling
Bank
Be in the banking business
Bank
Put into a bank account;
She deposites her paycheck every month
Bank
Cover with ashes so to control the rate of burning;
Bank a fire
Bank
Have confidence or faith in;
We can trust in God
Rely on your friends
Bank on your good education
I swear by my grandmother's recipes
Bank
A for-profit financial institution offering deposit, loan, and other financial services.
Sarah opened a savings account at the Bank downtown.
Bank
Entity facilitating financial transactions, investments, and currency exchanges.
The Bank offered competitive rates for home loans.
Bank
Regulated institution providing monetary services and wealth management.
As a business owner, Jake needed a Bank that offered robust commercial services.
Bank
Establishment handling deposits, credits, and financial instruments.
The Bank's new digital platform made online banking seamless.
FAQs
Why choose a Bank over a Credit Union?
Banks might offer a broader range of services, advanced technology, or have more widespread branches.
Are funds deposited in a Credit Union as safe as in a Bank?
Yes, both are insured, but usually by different entities – NCUA for Credit Unions and FDIC for Banks.
What's the key difference between a Credit Union and a Bank?
Credit Unions are member-owned and not-for-profit, while Banks are shareholder-owned and for-profit.
Can anyone join any Credit Union?
No, Credit Unions have membership criteria, often based on community or occupation.
Do all Banks operate on a for-profit basis?
Yes, Banks operate to generate profits for shareholders.
How do Credit Unions support local communities?
They often sponsor local events, provide educational resources, and reinvest profits locally.
Why do people prefer Credit Unions?
Personalized service, community focus, and potentially better rates are some reasons.
Are Banks more widespread globally than Credit Unions?
Yes, many large Banks have international branches, while Credit Unions are often more localized.
Do Banks typically offer higher interest rates on deposits?
Not necessarily; Credit Unions often offer competitive or even higher rates due to their not-for-profit status.
Do Credit Unions offer online banking?
Yes, many Credit Unions provide comprehensive online and mobile banking services.
Can I get a business loan from a Credit Union?
Yes, many Credit Unions offer business loans and services.
Are Credit Union fees generally lower than Banks?
Often, due to their member-focused, not-for-profit nature, Credit Unions have lower fees.
Can I access ATMs easily with a Credit Union account?
Yes, many Credit Unions participate in shared networks, offering extensive ATM access.
What's a significant advantage of joining a Credit Union?
Members often enjoy lower fees, better rates, and a more personalized experience.
Are Banks more technologically advanced than Credit Unions?
Larger Banks might have more advanced tech, but many Credit Unions also offer modern digital services.
Which is older, the concept of a Bank or a Credit Union?
The concept of banking predates Credit Unions by several centuries.
How do Banks differ in size and operations?
Banks can range from small community banks to massive international corporations with varied services.
What kind of accounts can I open at a Bank?
Savings, checking, CDs, investment accounts, and more, depending on the Bank's offerings.
How do Banks generate profits?
Through interest differences, fees, financial services, and investments, among other avenues.
Can non-members access some Credit Union services?
Typically, core financial services are for members, but some outreach programs might be public.
About Author
Written by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie CarlsonAimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.
