Credit Unions vs. Banks: Which is better for my money?

Credit unions and banks are both financial institutions that provide a safe place for your funds and have similar financial services.

When opening a savings account or taking out a loan, you might wonder whether to go to a bank or credit union. Is there much of a difference? Simply, credit unions are nonprofit organisations while banks are for-profit. The way it works is they serve customers by passing along their savings while banks maximise profit. Banks are generally better equipped for convenience. On the contrary, unions focus on better customer service and better rates. However, both financial institutions come with disadvantages and advantages. 

Credit unions vs banks

They essentially offer the same financial products such as checking and savings accounts, loans, and mortgages. However, one of the biggest differences is the rates and fees charged. 

Advantages of credit unions

They are membership-based institutions, which means you will need to be a member when opening an account. Becoming a member you become a part-owner of the union. Just like banks, they offer services such as savings and everyday accounts, loans, credit cards and term deposits. 

They are more focused on community and customer service. You’re more likely to get personalised care as well. Additionally, they might hold community-focused events that give back to their local communities. 

Read more on the advantages of credit unions here!

Disadvantages of Credit Unions

Some disadvantages may be that they mainly offer their services to local branches.  What that means is, if you’re located outside their areas of service, being a member becomes more difficult or receive physical banking services. The only way you could access those services is from Australia Post or possibly your the union’s website. That’s when banks become more of an advantage. Banks have more branches around rural and metro areas. However, before deciding on one, make sure to compare benefits and figure out which one better suits your financial needs.

Should I choose a credit union or a bank?

Choosing between a credit union or a bank comes down to your personal needs and financial goals. Although they offer lower fees and better rates for customers, you may be able to find comparable benefits at a bank. 

Enjoyed this article? Read more on how to open a bank account.