It’s easy to assume banks and credit unions are basically interchangeable, but there are major differences that can save you serious money. Here, we’re breaking down the key differences so you can make the right choice for your future.
The differences between credit unions and banks come from who owns them and who they serve. That affects the rates and type of services they offer, branch network sizes, and much more. Here’s a handy way to compare them:
Feature | Credit Union | Bank |
|---|---|---|
Ownership | Member-owned, not-for-profit, and For-Impact cooperative | Shareholder-owned, for-profit corporation |
Interest Rates on Deposit Accounts | Typically higher rates of return | Generally lower rates of return |
Primary Goal | Serve members and community | Maximize shareholder profits |
Loan Interest Rates | Usually lower rates | Usually higher rates |
Fees | Lower or no fees on most services | Higher fees, more fee types |
Account Minimums | Often no minimum balance requirements | Frequently require minimum balances |
Customer Service | Personalized, relationship-focused | More standardized, transactional |
Branch Network | Local/regional areas | Often national/international presence |
Membership Requirements | Must meet eligibility criteria | Open to general public |
Community Focus | Strong local community investment | Limited community involvement |
Deposit Insurance | NCUA insured up to $250,000 (Additionally, orsa credit union™ offers both extended share insurance up to an additional $100,000 by ESI AND the ability to potentially insure millions with an Extended Share Insurance Account.*) | FDIC insured up to $250,000 |
While banks tend to operate on a national level and focus on driving profits for shareholders, credit unions tend to be much more locally focused. That means not everyone can join. But if you do, you can expect better rates, more personalized services, and a focus on banking that actually benefits your community.
For example, at orsa™ our members are the people we serve and the collective owners of the credit union, each with an equal say in elections no matter their account size. Anyone who lives, works, worships, or goes to school in Michigan can be an orsa™ member with just a $5 deposit. Membership is also available for businesses and other legal entities (or for those who regularly conduct business) in Michigan. Finally, any immediate family member of an orsa™ member can also join us. If this sounds like you, experience the power of Belonging by opening an account and becoming an orsa credit union™ member today!
When you become a member of a credit union, you’re not just opening a bank account. You’re actually becoming a partial owner of the credit union itself.
Because the members own the credit union, its business model is entirely built around serving them (that means you!). So profits are reinvested in things like lower rates instead of being paid out to corporate shareholders. It also means you have some say in how the credit union operates and get treated as more than just another customer.
Because we're member owned, credit unions like us typically offer lower rates on loans and higher rates on savings. Comparing government collected NCUA data, the average car loan rate is nearly 2% less for credit unions while CDs are nearly 1% higher for saving.
Those seemingly small differences can really add up over time, particularly when saving for retirement, paying down a mortgage, or even using a credit card.
The same reason credit unions are able to offer more competitive rates enables them to charge fewer and smaller fees for things like overdraft , ATM use, or account maintenance. The difference is typically just a few dollars, but like with those better rates, this can add up over time. For example, our CloseEnuff™ Checking account protects you from overdraft fees alongside some great perks.
Credit unions like us tend to take the time to really get to know their customers, offering educational resources, giving personalized financial advice, and generally treating customers like people instead of account numbers. Unlike the employees at most major banks who work on commissions based on getting you to sign up for services, credit unions are able to really focus on what you actually need.
This also means that when, for example, you’re looking to take out a loan, your loan officer will look at your situation beyond just your income and credit score. Even when you call our Care Center for help, you’ll be talking to someone right here in Michigan.
Credit unions like us are not for-profit and owned by our members. But more than that, we’re For-Impact. We measure success by how well we serve our members and our communities.
Because we only serve Michiganders, we’re far more focused on finding ways to benefit both our members and the entire state. That means the personalized service we just mentioned, but it also means that instead of using your deposits to fund a real estate deal across the country, it goes to things like small business loans for the neighborhood bakery or auto shop.
Credit unions may be smaller than the major national banks, but they still offer great protection. You get the exact same level of deposit insurance backed by the federal government through NCUA along with employees that have your interests at heart. So, for example, you can have honest and open conversations about your financial struggles or dreams and get real advice to help you succeed. At orsa™ we go above and beyond the standard $250,000 NCUA insurance, as well. That means an additional excess share insurance of $100,000 by ESI and the ability to potentially insure millions with our Extended Share Insurance Account through credit unions in the ModernFi Network.*
While both credit unions and banks provide the same level of deposit insurance, credit unions do tend to weather tough financial times. While some chalk it up to the fact that many credit unions were founded with lessons learned during the Great Depression, the truth is that by taking fewer risks, maintaining greater capital reserves, and serving local communities, the safety of credit unions in something like a financial crisis tends to be greater.
Credit unions always have specific membership criteria, so the people who use them will vary. For example, a credit union may be focused on people living in a specific community, working in a specific industry, or are part of something like a labor union or church. Whatever the specific basis, credit union members share some common bond. In our case, we’re all Michiganders in our addresses and in our hearts. Learn more about who we serve here!
At orsa™ we’re all about serving our Michigan communities. We provide banking services, loans, and ways to grow your money to secure your future to people from every corner of the mitten. If you’re ready for a different kind of banking backed by people that care about your financial future, open an account to become a member today and see what a difference we can make.
Wherever you are on your financial journey, you Belong here.
