Credit Unions vs. Banks: Giving Credit Where Credit is Due
Sep 22, 2022
As a member of Honda Federal Credit Union, you have taken some great steps toward securing your financial well-being. Perhaps you also have an account at a bank. These days, credit unions and banks offer many identical services. However, it’s good to know where you will find some differences. Do you know how the two kinds of financial institutions compare?
How Credit Unions and Banks Are Different
If you only use a basic service, such as a checking account, you might not be aware of the differences between the two kinds of institutions. But there is one major difference: Ownership.
- Ownership. The number one difference between banks and credit unions is their profit status. While banks are for-profit institutions with ownership unrelated to the account holders, credit unions are member-owned not-for-profits. When you join a credit union, you become one of its owners. This leads to all the following differences.
- Profit. Banks exist to make a profit from their customers. In order to make that revenue, banks must often charge more fees and lend money at higher rates. Interest payments on savings are usually lower than what you can earn at a credit union.
- Nonprofit. Credit unions exist to serve their member-owners. They’re generally exempt from some taxes that affect banks, and they might even receive subsidies from their affiliated organizations.
- Eligibility. While banks are open to almost everyone with a decent banking history, credit unions require eligibility for membership. Either you or someone in your family must belong to a group that is affiliated with that credit union. The good news is, once you qualify to open an account at a credit union, you can generally keep it for life, even if you leave the qualifying group.
Credit Union Benefits
Honda FCU and other credit unions put their members first. This mission is displayed in many ways, some of which may not be obvious. Here are a few that will benefit you:
- Experience excellent member service. If you have a question or concern, your credit union associate is available to help. At Honda FCU, you can take advantage of our Ascend Financial Wellness service by signing up for a free consultation with an expert who will help you understand and overcome your personal financial hurdles.
- Enjoy access to extensive financial education. As member-owned financial institutions, credit unions put a lot of resources and energy into this goal. Honda FCU offers many online courses, videos and articles on our website and our Enrich education platform to teach core financial fundamentals and help better manage your finances. Most banks do not treat this as a priority.
- Control your budget with handy tools. Trying to figure out whether to pay off a credit card or save the money? We’re here to help! With the help of Enrich, Honda FCU has made their priority to provide numerous accessible calculators (some with accompanying articles) to help you determine your best financial move.
- Keep more money. Because credit unions not-for-profit mission is to serve members, they provide members with the best financial terms they can afford. That’s why you’ll see lower rates on loans, fewer and lower fees, and higher interest paid on savings.
- Feel confident with insured savings. Since 1970, the National Credit Union Administration (NCUA), a government agency, has provided deposit insurance for up to $250,000 per share owner, per insured credit union, for each account ownership category. As a federal credit union, Honda FCU is insured by the NCUA.
- Thrive with modern technology. In general, credit unions are providing more digital financial services than ever before. Honda FCU’s app makes handling your finances a snap!
In the end, attempting to describe every way that credit union membership stands out is a little like trying to define the joys of ice cream. A lot of people just dive right in. We know you’ve probably already taken advantage of some benefits. Just remember, we are here to serve your financial needs and help you achieve solid financial health. It’s our mission. And we’re proud to say why: Because we are your credit union!