Are Credit Unions Better Than Banks? [Guide for 2024]


When it comes to choosing a financial institution, there are a few different options to choose from. You can go with credit unions or banks—but what’s the difference, and which option is better for you? In this article, we’ll outline the key points of each institution to help you decide are credit unions better than banks.

Credit Union vs Bank

Both credit unions and banks serve the needs of those who need financial help or guidance. Often enough, they offer the same services, and some even consider them two sides of the same coin. However, the primary purpose of credit unions is to provide members with a variety of financial products and services, while the primary purpose of banks is to generate profits for their shareholders. We’ll explain the key points and the difference between banks and credit unions.

Credit Unions: Key Points

Credit unions are member-owned non-profit organizations that offer certain financial products and services to their members. But just as with any organization, there are some pros and cons you need to know before making your final decision. Let’s look at some of the pros and cons of credit unions:

Advantages of Credit Unions

As we already said, credit unions are not-for-profit organizations that try to satisfy their members’ financial needs in one way or another.

  • Put Their Members First

While banks are concerned with making money, credit unions’ primary goal is to cater to their members, which is why they offer amazing customer service. Credit unions generally make their members feel special and worthy of their time. 

  • Easy to Join

Even though the biggest difference when talking about credit unions vs bank is their way of joining, you can easily join credit banks. Yes, membership access is required, but you can join with ease if you fit all the requirements. 

  • Offer Financial Education

The good thing about credit unions is that they offer financial education, helping you better handle your money. They offer anything from in-person seminars on financial topics to teaching ways to prevent identity theft. The biggest difference between a credit union and a bank is that a credit union is interested in helping you with counseling or coaching.

  • Lower Fees

What’s great about these non-profit organizations is the fact they offer fewer fees, which could potentially save you a lot of money in two or three years’ time. Credit unions offer no or low fees and higher interest rates on CDs (certificates of deposit), and lower interest rates on loans than banks. So, if those are important to you, a credit union is likely the better choice for you.

Disadvantages of Credit Unions

Having explained the greatest advantages of credit unions, we’ll also mention their disadvantages to give you a better understanding of how credit unions work as a whole. 

  • Fewer Branches and ATMs

When comparing a bank vs credit union, it’s important to know that credit unions are not as widespread as banks, thus having limited access to ATMs.

  • Worse Technology

Smaller credit unions might not have the new technology big banks have, such as mobile banking apps, as they don’t have a budget as big as banks do. However, bigger and already established credit unions have top-notch tech comparable to that of banks

  • Less Flexibility

An important disadvantage of credit unions is their working hours. Even though they offer great services, credit unions tend to work only from 9 a.m. to 3 p.m., which is considered a big downside. Also, they’re not available in every state, so before becoming a member, you need to see whether there’s a credit union near you. 

However, all things considered, when weighing the pros and cons of credit unions, the pros certainly outweigh the cons.

Banks: Key Points

A bank is a financial institution licensed in granting loans and receiving deposits, and it’s an important part of the economy because of the services it offers. As expected, these for-profit institutions have their own advantages and disadvantages.

Advantages of Banks

There are a few advantages to opting for banks:

  • Larger ATM Network

Since banks are larger financial institutions than credit unions, it’s completely normal they have more branches and larger ATM networks. They’re located in every state, and their ATMs are everywhere, which makes it easier for people using the bank’s services to withdraw money.

  • Better Service Offers

While credit unions offer more or less the same services, banks offer a wider array of services. They offer credit cards for people with different credit histories: no credit history, an excellent credit history, and fair credit history. Also, they have credit cards for students, and customers can easily obtain either a secured or an unsecured credit card

  • Great Financial Technology

One of the main advantages of a bank is that it has a far better technology service than credit unions. Naturally, they make a lot more money than credit unions, so it’s understandable they have more money to invest in things like mobile banking apps.

Disadvantages of Banks

Just as credit unions, banks come with their cons as well:

  • Higher Chance of Going Bankrupt

The chances of going bankrupt are higher for banks when compared to credit unions, because customers might fear there’s something wrong with the bank and withdraw their money, leaving the bank without enough funds to repay every customer.

  • Greater Risk of Robberies

In contrast to credit unions that offer greater safety, while it’s great banks offer top-notch technology and everyone enjoys online banking, there’s one thing to keep in mind—the increased risk of potential robberies. In addition to physical robberies, just as you can transfer or withdraw money with a click, your money can be stolen in a similar way.

Key Takeaways

The greatest advantage of credit unions is that they offer lower interest rates on loans.
Credit unions have restricted flexibility.
The advantages of banking include a greater ATM network and great services overall.
The chances of going bankrupt are higher if you choose a bank as your option.

Banks vs Credit Unions Comparison at a Glance

Banks Credit Unions
For-profit organizations Non-profit organizations
Everyone can join Require you to be a member
A bigger ATM network Restricted ATM network
No financial education Offer financial education
Interested in making more money Care about their members
Higher chance of going bankrupt Little to no chance of going bankrupt
Can be found in every state Not available in every state

What Should You Consider Before Choosing Between a Credit Union and a Bank?

Before you decide on a credit union or bank, there are a few things you should consider:

  • Think About What Your Needs Are

Before choosing either option, you need to think about what your goals and needs are. Credit unions may be a better choice if you’re looking for a more personal relationship with your financial institution, while banks may be better if you’re looking for more products and services. It’s up to you and your needs to determine which option is best for you.

  • Consider Your Current Financial Situation

The next thing to think of when choosing between a bank or credit union is your financial situation. If you’re looking for an institution to get a loan or any line of credit, it’s better to consider banks, but if you’re not comfortable with taking on debt, opt for credit unions.

  • Look Up and Compare Several Lenders

Although people often choose the same institution they’re already a part of, that’s not always the smartest choice. Don’t just consider the credit union or bank you’re already affiliated with—lookup and compare rates at other institutions to make sure you’re getting the best deal.

DID YOU KNOW: Before making a decision on whether to choose a credit union versus bank, you should know there are different types of banks: online banks, commercial banks, and national banks, to name a few. Each one offers different options and services.

 Are Credit Unions Better Than Banks: The Verdict

There’s no right or wrong answer to this, and nobody can tell you whether you’re making the right decision in choosing credit unions. That’s a decision you should make on your own according to your specific needs, and no one should try and tell you otherwise. Credit unions are non-profit institutions, but each credit union has different membership requirements. But, if you’re considering a new financial institution, it’s good to know you have few options available. 


What are the main disadvantages of credit unions?

The biggest advantage of credit unions is that you need to become a member in order to enjoy their services. Also, they have limited options, and often fail to offer a variety of credit cards.

Why shouldn't I bank with a credit union?

Credit unions are not available in every state, so you may not be able to join one if you don’t live near one. Additionally, credit unions may have fewer branches and ATMs than banks, so it may be harder to access your money if you’re not near a branch.

Is a credit union better than a bank?

If you’re left wondering are credit unions better than banks, you really need to think of your personal preferences and needs. That said, credit unions often offer lower interest rates on loans and mortgages, no or low fees, and higher savings rates than banks. So, if those are important to you, a credit union may be the better choice for you.


I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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