How Does a Credit Union Differ From a Bank?

Oct 16, 2026

Credit unions and banks are both financial institutions and can offer the same kinds of products and services – making it easy to think of the two as basically the same thing. However, there are still a number of differences to keep in mind when deciding where to go for your financial needs.

These differences between a credit union and a traditional bank stem from their very structure. A credit union is a “not-for-profit” financial cooperative that is owned by its accountholders (also known as its members), whereas a bank is “for profit” and owned by stockholders.

Let’s break down these differences further.

What Happens to the Profits?

At a not-for-profit credit union, the earnings are paid back to the members in the form of higher savings rates and lower loan rates.

At a for-profit bank, the earnings are paid only to the stockholders, who may or may not be accountholders at the bank itself. As such, banks often have lower savings rates and higher loan rates.

Who Controls What Happens to the Financial Institution?

Banks are controlled by their stockholders. Regular customers do not have any say in how the bank is operated.

Credit unions are governed by a board of member volunteers. These volunteers are elected by the membership and generally reflect the diversity of the credit union.

Who Can Open an Account?

Credit unions typically have a limited field of membership that determines who is eligible to join. This might be based on location or on employer – for example, Honda FCU is open to those who work for or retired from a company affiliated with Honda. Most credit unions also allow the immediate family members of eligible or existing members to join.

Banks are typically open to the general public and can serve anyone.

Is My Money Safe and Protected?

Both banks and credit unions insure your deposits up to $250,000. Banks are FDIC insured, while credit unions are NCUA insured, making them equally safe options for your hard-earned money.

How Is My Community Affected?

Credit unions have close ties to their communities. They might participate in or sponsor local events, provide free financial education and resources, and find ways to give back or otherwise support the local economy. This community emphasis also means members enjoy highly personalized service from employees who can really get to know them.

Banks might be local, regional or national. Local banks may also have close ties to their area, similarly offering more personalized service and supporting the community in a variety of ways. Regional and national banks, however, typically have less emphasis on the community.

How Easily Can I Access My Accounts?

A credit union may have as few as one physical branch, but many credit unions are part of a shared branching network, such as the CO-OP® Network. This network of branches and ATMs allows members to access their accounts and cash at many locations nationwide without incurring out-of-network surcharges.

A bank’s number of physical locations depends on its size. A local bank might only have one office, while regional banks have multiple and national banks have even more. However, banks do not share resources – such as ATMs – with each other.

Both banks and credit unions typically offer digital banking services, allowing members to access their accounts from home or on the go. Banks are often quicker to roll out new apps and other technology, however.

Ultimately, whether you open an account at a credit union or a bank is entirely up to you. Both types of financial institutions have a number of benefits and even similarities – but depending on your needs, the differences can make a big impact.

Links:

https://www.hondafcu.org/membership/benefits-and-discounts

https://www.hondafcu.org/membership/become-member