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What’s the difference: Bank versus a Credit Union

When choosing the best financial institution to manage your money, you have your pick of local and national banks—including credit unions. But what exactly is a credit union, and how does it differ from a traditional bank?

For-profit versus not-for-profit

One of the most significant differences between banks and credit unions is that a credit union is a not-for-profit institution. Like banks, credit unions accept deposits and provide various services like loans. Profits made by credit unions are returned to the customer in the form of:

  • Reduced fees
  • Higher savings rates
  • Lower loan rates

Credit unions are also owned and controlled by a volunteer board of directors elected by credit union members. Membership in a credit union is gained through the following:

  • Membership in a group like a church, labor union, or school.
  • If a family member is a member of a credit union.
  • Sponsorship of a credit union through an employer.
  • If you live or work in a specific geographic area.

Banks tend to have more products and services

As beneficial as credit unions are for some people, it only sometimes has the services they need. Larger banks have more products and services available.

The FDIC doesn’t insure credit unions

While credit unions are federally insured, they aren’t insured by the Federal Deposit Insurance Corporation (FDIC). Instead, they are insured by the National Credit Union Share Insurance Fund, managed by the National Credit Union Administration. The NCUA “works to protect credit union members and consumers, raise awareness of potential frauds, facilitate access to affordable financial services, and educate consumers on the importance of savings and how they can improve their financial well-being.”

Like the FDIC, the NCUA insurance guarantees up to $250,000 per share owner, per insured credit union, for each account ownership category. You can check whether a credit union is covered through an NCUA search.

1st Advantage Bank is your local bank dedicated to serving the community

At 1st Advantage Bank, we know you and your needs. As a small community bank, we offer more free accounts, have better rates, and lower fees than national chain banks. We also get back to you faster about critical financial decisions so you aren’t left hanging.

Trust 1st Advantage Bank to manage your money and make a difference in your community.

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Contact 1st Advantage Bank today!

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