Which is Better – Banks or Credit Unions?

There are a lot of different financial institutions out there, so it can be tough to decide which one is right for you. In this blog post, we’ll compare and contrast banks and credit unions to help you make a decision.

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Banks and credit unions both have a long and complicated history. Credit unions started in Germany in the 1800s as a way for workers to pool their money and make loans to each other. In the United States, credit unions were started by groups of farmers and teachers who were looking for a way to get loans without having to go through a bank.

The first banks

Banking began in Mesopotamia, and later Phoenicia, Egypt and Greece. The first banks may have been the religious temples of the ancient world, which accepted deposits of grain and livestock from farmers and traders who needed to finance their transport to market. In return, the temples issued certificates entitling the depositors to reclaim their goods at a future date.

The Code of Hammurabi (c.1760 BC), which regulated commerce in Babylon, set fees for various services provided by bankers. But it was not until around 600 BC in Greece that banking began to resemble modern banks. The Greek word “tumbos” referred to a coffer or chest, and “slave” came to mean money. So, “bankers” were originally slave-holders – they held other people’s money in chests or strongboxes.

The Romans developed banking further and by AD 300 there were more than 300 banks in Rome. After the fall of the Roman Empire banking declined in Western Europe. In medieval times people deposited their valuables with goldsmiths for safekeeping and received a receipt for their deposit – this gradually developed into the modern system of bankers’ deposits and receipts

The first credit unions

The first credit unions were founded in Germany in the 19th century, in response to the financial difficulties experienced by workers at that time. Workers were often unable to obtain loans from banks, and so they formed their own organizations which offered loans at more reasonable rates. The first credit union in the United States was founded in 1909, and since then credit unions have become an increasingly popular alternative to banks.

There are now more than 7,000 credit unions in the United States, with a total membership of more than 110 million people. Credit unions offer a wide range of services, including savings accounts, checking accounts, and loans. They are typically run as non-profit organizations, and so they often offer better interest rates and fees than banks.

If you are looking for an alternative to a bank, a credit union may be a good option for you.

How they operate

Banks and credit unions are two different types of financial institutions that offer similar services. Both banks and credit unions take deposits, make loans and offer other services to their customers. However, there are some key differences between the two. Banks are for-profit institutions that are typically owned by shareholders, while credit unions are non-profit institutions that are owned by their members.


Most people use the term “bank” to refer to their personal savings institution, but there are actually two different types of financial institutions that are commonly referred to as banks: commercial banks and investment banks. Both types of banks accept deposits, make loans, and provide basic checking account services, but there are some key differences between these two types of financial institutions.

Commercial banks are the type of bank that most people think of when they think of a bank. They are for-profit entities that are owned by shareholders. These shareholders can be individuals, other businesses, or a combination of both. Commercial banks make their money by providing banking services to individuals and businesses and collecting interest on loans. They also earn income from fees charged for bounced checks, ATM usage, and other services.

Investment banks are different from commercial banks in a few key ways. First, investment banks are not for-profit entities. They do not have shareholders in the traditional sense. Instead, they are owned by the partners who work at the firm. Second, investment banks do not take deposits from individuals or businesses like commercial banks do. Instead, they primarily raise capital by underwriting securities and providing other financial services to corporations and governments.

Credit unions

Unions are member-owned cooperatives, meaning that anyone who opens an account with the credit union becomes a shareholder. December 2020 marks the 100-year anniversary of the credit union movement in the United States.

Credit unions offer the same financial services as banks, but they are structured differently. Instead of making a profit for shareholders, credit unions return earnings to their members in the form of higher interest rates on deposits, lower fees and loan rates.

There are more than 5,000 credit unions in the United States, with more than 115 million members. These member-owned cooperatives operate in all 50 states and serve anyone who lives or works in their field of membership.

Pros and cons

There are several things to consider when choosing between a bank or a credit union. Some people prefer banks because they offer more services and have more branches. Others prefer credit unions because they offer higher interest rates and have lower fees. Let’s take a look at the pros and cons of each option to help you decide which is best for you.


There are a few key differences between banks and credit unions that you should be aware of before making a decision about which is right for you.

Banks are for-profit institutions that are typically shareholder-owned. Credit unions, on the other hand, are not-for-profit cooperatives that are owned by their members. This difference in structure means that banks are motivated by generating profits for their shareholders, while credit unions are motivated by providing the best possible service to their members.

Another key difference is that banks typically have a wider range of services and products than credit unions. This can be an advantage if you’re looking for a one-stop shop for all your financial needs. However, it’s important to keep in mind that not all of these products and services may be in your best interest. For example, some banks may push credit cards and other products with high interest rates and fees.

Finally, banks tend to have more branches and ATMs than credit unions. This can be helpful if you need to access your money when you’re away from home. However, it’s important to note that most banks now offer mobile banking options that allow you to deposit checks and transfer money using your smartphone, so this may not be as big of a factor as it once was.

Credit unions

When choosing a financial institution, there are a lot of options. But the two main types are banks and credit unions. So, which one is better? It really depends on your needs and preferences. Here’s a look at the pros and cons of both:


-Banks are for-profit businesses, so they tend to have more products and services (like investment options and business loans) than credit unions.
-They also have more locations, so it’s easier to find one near you.
-Banks are typically open longer hours than credit unions.

-Banks are for-profit businesses, so they might charge higher fees than credit unions.
-They can also be less personal — you might feel like just another number to them.

Credit Unions

-Credit unions are not-for-profit organizations, so they might offer lower fees and better rates than banks.
-They also tend to be more personal — you’re more likely to get to know the staff and feel like part of the community.

-Credit unions typically have fewer locations than banks.
-They also tend to have shorter hours and fewer products and services than banks.

Which is better?

Banks and credit unions offer many of the same services, but there are some key differences between the two. Banks are typically for-profit institutions, while credit unions are non-profit. That means that credit unions may offer better interest rates and lower fees. But banks usually have more locations and ATMs. So, it really depends on what matters most to you.


The key difference between a credit union and a bank is that credit unions are not-for-profit entities owned by their customers, while banks are for-profit entities owned by shareholders. This ownership structure affects the way these organizations make money and how they serve their customers.

Both banks and credit unions offer deposit products such as checking accounts, savings accounts and money market accounts, as well as lending products such as personal loans, mortgages and lines of credit. However, there can be significant differences in the fees charged for these products, the interest rates paid on deposits and the terms of the loans offered.

Credit unions typically offer lower fees and better interest rates on deposit products, while banks often provide more convenient locations and longer hours. When it comes to lending products, credit unions may be more likely to offer special deals or discounts, but banks may be able to provide more personal service.

Credit unions

There are advantages and disadvantages to both banks and credit unions, so the best option for you will depend on your individual needs and preferences. Credit unions tend to have lower fees than banks and offer higher interest rates on deposits. They also typically offer more personalized service. However, they may have fewer branches and ATMs than banks, and they may not offer all of the same services.

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