Bank vs. Credit Union

For-Profit vs. Not-For-Profit

One of the major differences between banks and credit unions is the way they handle money. Banks are for-profit institutions that are trying to maximize their revenue. They’re often publicly traded, and are trying to generate returns for shareholders from the bank’s stock. The money that a bank holds for its customers is usually either invested or given to others in the form of loans or dividends in efforts to increase profitability. Generally, banks tend to have lower interest rates on deposit accounts, higher interest rates on loans, and different variations of fees. Credit unions are not-for-profit institutions that give back profit to members in the form of higher interest rates on deposit accounts, lower loan interest rates for loans, and minimal fees. They are also member owned, meaning that when you join a credit union you are essentially part owner. Additionally, the board of directors is filled with volunteers, not paid like banks board of directors.

FDIC vs. NCUA

Both banks and credit unions are financially insured $250,000 per account. The difference is who they are insured by. Banks are insured by The Federal Deposit Insurance Corporation (FDIC) which is an independent insurance agency that protects customers’ deposits in banks in case of any sort of bank failures. Credit Unions are insured by The National Credit Union Administration (NCUA) which is an independent agency that administers the National Credit Union Share Insurance Fund (NCUSIF) that protects members’ deposits in case of credit union failures. Though insured by different agencies, they are both backed by the United States government.  

Convenient vs. Inconvenient

Banks are generally much larger organizations than credit unions, and tend to have more brick and mortar locations. Although banks have more locations, credit unions usually have ATMs that are accessible around town. In Albuquerque, Rio Rancho and Santa Fe, most of the credit unions use a free ATM called CU Anytime, there are over 100 CU Anytime ATM’s in the area that are strategically placed at easily accessible and convenient locations. Credit Union members have the freedom to utilize nearly 30,000 ATMs nationwide. Banks generally have specific ATMs for their institution that their customers have to use otherwise they will receive a fee for each ATM transaction.

Big-Box Commercial Bank vs. Community Credit Union

When someone chooses Sandia Area, they are choosing a local institution that has been serving New Mexico since 1956. Choosing a community-based credit union for your banking needs means your money and business remains with a local, non-profit cooperative that’s vested in protecting your financial future. Banks are typically large corporations owned by investors that are looking to maximize profits.

Whether you’re an existing member with Sandia Area Federal Credit Union or you’re thinking about switching to Better Banking at Sandia Area, we strive to educate our community on financial choices, such as choosing between a big box bank and a locally-based credit union. Whether you choose to be a customer of a bank or a member of a credit union can be based on whether you agree with what the company stands for. Educate yourself on the different options available to you based on your financial needs, and don’t hesitate to switch organizations or open additional accounts to benefit how you manage your money.