5 Key Differences Between Credit Unions and Banks
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Even if you’re a Signet member, you may not really know all of the differences between credit unions and banks. For non-members who may be interested in joining a credit union, understanding the distinctions between a credit union and a bank can help them make the financial decision that’s right for them.
Here are the most important differences:
Credit Unions Are Not-for-Profit
This is the most important difference between a credit union and a bank. Banks are for-profit corporations, and pay out their profits to shareholders. Credit unions, on the other hand, reinvest profits into the union to raise savings interest rates, lower loan rates, and lower fees for financial services. Profits are only used to benefit members.
Credit Unions Are Member-Owned
While banks are owned by shareholders, credit unions are owned by their members. This means that while bank customers don’t have a voice in the operation of the bank, a credit union’s customers do. Members have the right to vote on the election of the credit union’s board, and can run for election themselves. Remember with Signet, you’re not just a member but part owner.
Credit Unions Have Eligibility Requirements
While banks are corporations that are free to do business with whomever they choose, credit unions are required by law to serve a particular group. Each credit union is different. Some only serve people who live, work, or worship in certain areas, while others might serve particular professions. Signet membership, for example, is open to anyone who lives, works, attends church or school, or volunteers in the counties of Ballard, Calloway, Carlisle, Crittenden, Fulton, Graves, Hickman, Livingston, Lyon, Marshall and McCracken. Find the credit union closest to you!
Credit Unions Charge Fewer And Lower Fees
Because credit unions are not-for-profit, they do not charge as many fees for services as a bank. The fees they do charge are often lower, as well. Minimum deposits for accounts are usually lower, if they exist at all. Signet, for example, has no minimum balance requirement for our checking accounts.
Credit Unions Focus On Consumers
Banks offer a wide variety of services to many different kinds of customers, such as commercial loans for businesses. By contrast, because they are member-owned not-for-profits, credit unions typically focus solely on providing better consumer services. These include higher interest rates on savings accounts and lower mortgage rates.
If you think a credit union might be the right choice for you, check your eligibility with Signet and apply today! Even if you’re not eligible for membership with Signet, you can use this handy search tool to find a credit union that can serve you.