Deciding whether to put your money into a big bank or a credit union can be difficult if you don’t understand the difference of the two.  A credit union is owned by its members and is a non-profit organization. Any money that a credit union makes goes back to its members, and fees are only charged to cover overhead fees. A big bank is owned by a few members and is a for profit institution which has a primary purpose of making money for its investors and and stock holders. Banks tend to offer more services, and are often more accessible and convenient to customers, especially those that travel a lot or don’t live close to their credit union. Here are some  things to consider when choosing a big bank or a credit union.

The very first thing you should know is that your money WILL be protected in case the bank goes under. With a big bank, look for the FDIC sign, which stands for Federal Deposit Insurance Corporation. Credit union accounts have similar protection from the NCUA, which is the National Credit Union Administration.

You might only start off with a checking or savings account, but as your account gets bigger, investing it in securities should be in your cards. Credit unions will always have better rates than big banks because they are  there to make a profit for you, not themselves. If you know that you are going to need any type of loan, open a credit union account since it is much easier to get a loan if you are already a member. Loans with credit unions interest payments will be lower than with a traditional banking center. When searching for a bank, find out what the interest rates are for the different services offered. Compare daily, monthly, quarterly and yearly simply by going to www.bankrate.com.

Credit unions tend to have better customer service since their members are local. They are also known to give better financial advice and guidance since it is crucial that they retain their members. The employees of a credit union care about their members, and know who everyone is. When I banked with a small town bank as a teenager, I would get personal phone calls when my account was low since the customer service representative knew my parents would be mad if I overdrafted. Very small town, but great service.

Big banks win this category in that they have locations everywhere. You can’t go very far without seeing a Chase ATM or bank (especially after they took over Washington Mutual). Credit unions have locations that are few and far between and sometimes one have one location. Some credit unions make up for this by providing free mail in deposit envelopes and reimbursing ATM fees, like USAA.

Believe it or not, fees at the bigger banks are lower because they can afford to charge less for certain things because of their for profit status. However, Big banks have more fees than credit unions have and can charge for things such as a  dormant account fees, too many

There are pros and cons of credit unions and big banks. Weigh them based on what is important to you. You can also enjoy the best of both worlds and have a checking account with a big bank and a savings account with a credit union.  The choice is yours and the difference really comes down to personal preference, services that are offered, and how they are offered. Happy Banking!