Find the best banking institution for your needs recently released a study which revealed that checking account fees have hit an unprecedented high. It also notes, that its getting more and more difficult to find free, no-strings-attached checking accounts. (Get all the details of the study here.) However, according to Bankrate, 72 percent of the largest credit unions still offer free checking.

In light of this new information, we thought we would discuss the difference between banks and credit unions. Depending on your needs and financial goals, using one establishment over the other could  be a better fit for you and your family.  And there could be more factors to consider besides the option for a free account.


Fundamentally, a bank is a business that holds onto your money for you and uses it to create profits by investing that money or loaning it out to other customers. A bank is a business like any other: run for profit. This means that all activities the bank engages in are expected to show a profit. Advertising, lobbying and risk assessment are the key expenditures banks must pay in order to stay on top of the competition.

Credit Unions:

Credit unions are different from banks; when you deposit your money, you’re actually buying shares of the company. Rather than being a customer, you’re part owner: Credit unions aren’t run for profit, which means a lot of the concerns and scary decisions of larger banks never even come up. Any profits are what allow credit unions to offer better rates on loans and savings, typically lower fees and other advantages. At the end of the year, any revenues beyond this are distributed to the membership through dividends.

Bank or Credit Union:

While the differences between banks and credit unions are large, it’s often the case that our day-to-day experiences with both are pretty similar.

Overall, the main question you should ask is what your current needs are. Are you living paycheck to paycheck? Many of us are, and for that reason, it could make more sense to simplify and go with a large bank that can quickly respond to your needs. If you’re trying to keep up with your savings, it may make more sense to “pay yourself first” by using a share account that’s not as easy to get to. But if your income is stable and your spending doesn’t really fluctuate from month to month, a credit union is your best option for watching your balance continuously grow.

When it comes to making your decision, consider these questions:

  • Does the bank offer online services? Online banking offers 24/7 access to your account. Transactions are instant and spending is tracked, which can be helpful for any person on a budget. In addition, consider online bill pay options and the ease of transferring funds to or from other accounts.
  • How many ATMs are located near your work and home? Once again, choose the bank that is most convenient for you.
  • What are the bank’s fees like? Look into overdraft fees, the penalty for bounced checks, and if your account must have a minimum balance.
  • What additional services are provided? Most banks will already provide you with a debit /check card or direct deposit when you open your account. However, think about your future banking needs. Would you feel comfortable opening other accounts with the bank such as Money Market accounts, CDs, or loans?