Skip to Content
Husband and wife sitting on couch drinking coffee and talking about managing their money in their marriage.
Marriage and Money

Credit union or bank: What's the difference?

Which is the better choice, a bank or a credit union? While both can offer answers to saving money they function differently. When thinking about money management, learn the differences.

Have you ever wondered what the difference is between a credit union and a bank? Or whether one might be a better choice over the other? While both financial institutions can offer you many solutions when it comes to saving money, they generally operate a bit differently. Let's explain the differences when thinking about your money management.
Unlike banks that are profit-driven, credit unions are not-for-profit banking and lending institutions that are member-owned. A credit union essentially works as a money cooperative. As with a traditional bank, your money is pooled with the money of other credit union members and is loaned out at the credit union's discretion.

Because of their not-for-profit status, a credit union typically offers lower interest rates on loans and higher interest rates on saving accounts and CDs. And because they only deal locally, credit unions can also be a little more flexible with who they choose to loan their money to than a bank. Also, if you prefer to keep your money local, a credit union might be the right choice for you.

While anyone with an unblemished financial record can walk in off the street and open a checking or savings account at the bank, credit unions generally have certain restrictions as to who can join. Credit unions are community focused, and their services are usually only offered to people who live, work, and do business within a certain region. Some credit unions exist to serve employees of a certain employer, or members of a certain association, or even a religious or fraternal organization.

Your money is likely to be safe at a credit union as it is at a bank, because federal credit unions are insured by the National Credit Union Share Insurance Fund. Credit unions generally have less aggressive fee structures than banks as well, so you might pay less to access, manage, and transfer your own money.

Credit unions can be appealing because of their community focused approach to banking, and have become a popular alternative to banks in today's post-big bank bailout era. If you prefer more of a no frills approach to banking, credit unions may be a good choice. However, it may be likely that larger banks will have more ATMs, locations, and general visibility in your region than your local credit union.

If you have questions about banking, finances, or living on a budget, be sure to visit the Protective Learning Center for more information.



Arrows linking indicating relationship

Related Articles

Couple walking in raincoats, arm in arm, along a rocky beach.

Valuable money basics for a financially healthy marriage

Learn more
Newlyweds on their wedding day sharing a private moment and smiling.

Tips for weddings on a budget

Learn more
 Man looking lovingly at his fiancee.

What is a prenuptial agreement?

Learn more

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.