Published in July 28, 2021
When opening a savings account or taking out a loan, you might wonder whether to go to a bank or credit union. Is there much of a difference? Simply, credit unions are nonprofit organisations while banks are for-profit. The way it works is they serve customers by passing along their savings while banks maximise profit. Banks are generally better equipped for convenience. On the contrary, unions focus on better customer service and better rates. However, both financial institutions come with disadvantages and advantages.
They essentially offer the same financial products such as checking and savings accounts, loans, and mortgages. However, one of the biggest differences is the rates and fees charged.
Banks | Credit Unions |
For profit | Non-profit |
Higher fees | Lower fees |
More branch locations | Less branch locations |
Less focus on customer service | More focus on customer service |
Technologically advanced | Technologically delayed |
They are membership-based institutions, which means you will need to be a member when opening an account. Becoming a member you become a part-owner of the union. Just like banks, they offer services such as savings and everyday accounts, loans, credit cards and term deposits.
They are more focused on community and customer service. You’re more likely to get personalised care as well. Additionally, they might hold community-focused events that give back to their local communities.
Read more on the advantages of credit unions here!
Some disadvantages may be that they mainly offer their services to local branches. What that means is, if you’re located outside their areas of service, being a member becomes more difficult or receive physical banking services. The only way you could access those services is from Australia Post or possibly your the union’s website. That’s when banks become more of an advantage. Banks have more branches around rural and metro areas. However, before deciding on one, make sure to compare benefits and figure out which one better suits your financial needs.
Choosing between a credit union or a bank comes down to your personal needs and financial goals. Although they offer lower fees and better rates for customers, you may be able to find comparable benefits at a bank.
Enjoyed this article? Read more on how to open a bank account.
While we at Tippla will always do our best to provide you with the information you need to financially thrive, it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any decisions.
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