Credit unions versus banks — it’s the David-and-Goliath of banking options. The community-based non-profit versus the stockholder behemoth. Main Street versus Wall Street. But, big picture aside, we all want our banking experiences to be convenient, accommodating, and lucrative. So when it comes down to what you do with your money, both credit unions and banks have merit.

Some of modern banking’s best features (plenty of in-network ATMs, investment options, low fees) are offered by both credit unions and banks. Other characteristics, like high-yield savings accounts and in-house credit cards, are split between the two. The decision whether to go with a credit union or a bank hinges on your personal priorities.

We’ll walk you through the key differences between banks and credit unions to help you land on your best option.

Where Credit Unions Excel

Credit unions are member-owned, non-profit financial cooperatives. Let’s break that down. Credit unions are “member-owned” because every account is also a share in the company. Because they’re non-profit, all surplus funds are returned to members through low fees coupled with lofty interest rates on savings accounts. “Financial cooperative” is another way of saying credit union. Financial cooperatives are institutions owned and managed by members, for members.

There’s a communal, synergistic feel to the organization of credit unions. The funds you deposit provide loans for other members. And several unions have special membership requirements — if only geographical — ensuring that you have things in common with the people you’re banking with. Credit unions call this the “bond of association.” If conscientious investing is among your money goals, a credit union ensures that your dollars are supporting your community, not the 1%.

The main pitfalls of credit unions have to do with accessibility. While there are large, regional options alongside tiny operations, in general there aren’t as many branches or in-network ATMs with credit unions as you find with major banks. Shared branches and cooperative ATMs go a long way to remedy credit unions’ typical constraint, but the jurisdiction of credit unions range widely. If your credit union has a smaller reach, you might have to pay more to access your money by using out-of-network ATMs and paying the accompanying fees.

The same goes for credit unions’ tech capabilities. Some offer functional apps (and 24/7 banking as a result) but others lag far behind the fintech curve.

Go with a credit union if…

  • A personable, community-based experience is more important to you than 24/7 convenience
  • You keep most of your spare cash in savings and want to see good returns
  • You don’t mind looking for a credit card elsewhere
  • You don’t prioritize mobile banking

Where Banks Excel

Banks are traditional financial institutions, in operation for about 400 years longer than credit unions. Banks accept deposits in exchange for creating credit and extending loans. But while deposits in credit unions buy you a stake in the company, your deposit in a bank simply opens an account. The price structure of a bank is designed to reward the shareholders on the top floor.

As a result, banks don’t boast the sky-high interest rates or super low fees of credit unions. But banks do offer a more robust spread of investment and loan opportunities, coupled with broad accessibility and state-of-the-art financial technology. If you have an account with US Bank or Bank of America, for example, you’ll never have to wonder whether you’ll be able to find somewhere to withdraw cash or if you can transfer funds online. It’s going to be simple.

The agility of big banks is their primary strength. If you appreciate the convenience of syncing your bank account to, say, Venmo, TurboTax, or Betterment, you may find membership with a mom-and-pop credit union a little taxing.

Go with a bank if…

  • Broad support is more helpful to you than personalized support. Think, instant online and phone customer service, rather than a branch teller who knows you
  • Mobile banking is your primary means of banking
  • You like the convenience of bank credit cards and in-house bill payment
  • You don’t keep enough in a traditional savings account to be concerned about interest

How to Choose the Best Credit Union or Bank

This is the decision-making process we used when we found banks.

Government backing

You should only put your money somewhere that’s backed by the U.S. government. For banks, this means being insured by the FDIC. For credit unions, the NCUSIF. Both agencies insure each depositor up to $250,000. (Accounts with higher balances should be split between institutions.)

Transparent price structure

The level of clarity an institution provides about the fees you can expect to pay — and the interest or rewards you can expect to receive — serves as a pretty accurate reflection of how upfront and helpful that institution is. If you have to search for basic information now, you’re going to have a hard time finding answers to complex situations later.

Variety of banking services

Your bank or credit union should serve as a one-stop shop for most of your financial needs. Verify that you can grow your savings, write checks, obtain certificates of deposit, and apply for a loan all in-house.


Whether you’re fairly low-tech or just got finished installing your newest home automation device, you probably want to be able to access your account mobily. Fair warning: The presence of an app doesn’t equate to full virtual control of your money or even a pain-free digital experience. Scout out the feedback for credit union and bank apps on Google Play and iTunes before you commit. Less than 3.5 stars from either app store should give you pause.

How to Switch Banks or Credit Unions

You’re on a mission to find the best home for your money. You started with the big question: Which banking format is right for me? If parsing through the trade-offs between credit unions and banks helped you decide which institution is right for you, you are probably just about ready to pull the trigger and open a new account.

Closing accounts with one entity and opening up accounts elsewhere doesn’t have to be a complicated process — it’s a matter of taking steps in the right order.

  • Open up an account with the bank or credit union of your choice. Because everybody wants your business, a new account is easy to set up, whether you do it online or in a brick-and-mortar branch. You don’t want to close your existing account as soon as you get a deposit set up in your new one. First of all, your new cards probably haven’t yet arrived in the mail, and you likely have automatic billing and payment you need to transfer first.
  • Transfer funds either via the mobile payment app Zelle, by cutting yourself a check to deposit, or by linking accounts. Linking is likely the easiest method and requires just four points of information:
    • Bank name
    • Bank location (city and state)
    • ABA routing number (bottom left corner of check)
    • Account number
  • Identify every bill that automatically comes out of your checking account. Scroll through several months worth of charges (at least the last three) to be sure you aren’t missing anything — not the gym membership, the wine subscription, the mortgage payment. Do the same for automatic deposits. Switch everything over to the new account.
  • Keep your old account open for at least a month, with enough funds to cover surprise bills you haven’t switched over. You don’t want to get stuck with late fees.