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The Differences between Credit Unions and Banks
Although they might seem similar, there are some big differences between credit unions and banks. Understanding them will help you make the right choice about where to put your money and how to handle your finances. Want to make sure you qualify to join Suncoast Credit Union first?
Ownership Differences between Credit Unions and Banks
Banks and credit unions are different in several ways, but it all starts with ownership. Banks and credit unions are financial institutions that provide similar services like savings accounts. However, credit union members own the financial institution and the credit union works solely for them. We'll look at this ownership difference more closely by explaining why credit unions are not-for-profit and how that benefits you as a member.
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Credit Unions: Not-for-Profit and Member-Owned
Credit unions like Suncoast are not-for-profit financial cooperatives owned by their members, and they exist specifically to help meet the financial needs of their members. Because they're member-owned, members have more control and can receive more personalized services. Banks, on the other hand, are for-profit institutions, which are owned by shareholders. Credit unions prioritize the financial needs of their members because they exist to serve their members rather than make a profit for shareholders. This unique membership model is part of what makes credit union accounts so great. Unlike your standard bank account, you'll get benefits like lower fees, lower interest rates, higher interest on deposits, and a variety of free services (just to name a few).
Banks: For-Profit and Shareholder Owned
When you're thinking of where to put your money or where to borrow it, national banks are probably the first thing that comes to mind. These for-profit companies offer shareholder ownership, so they're different from credit unions. They're designed to make their shareholders money, so they don't work in the same cooperative way that a credit union does. Shareholders hope to make a profit, so they're not as interested in the customers and their needs. This can lead to higher interest rates on loans and possibly higher fees as well. Unlike the membership-driven way that credit unions tend to work, banks don't always favor their customers and borrowers.
Cooperative Principles of Credit Unions
Suncoast is a not-for-profit financial organization that exists to meet the financial needs of our members. If you're looking for competitive rates on a car loan, a fee-free savings account, or a checking account, for example, a credit union is your best choice, especially considering how many national banks have higher costs associated with these services.
Credit unions operate under the eight principles of a cooperative, which are:
Voluntary and open membership in a credit union
Democratic member control of credit unions
Member economic participation within credit unions
Autonomy and independence of the credit union
inancial education, training, and information on banks and credit unions
Cooperation among cooperatives and other credit unions
Concern for the community outside of the credit union
Diversity, Equity, and Inclusion for all
At Suncoast, we're proud to say that whatever we do and whatever decisions we make, we always work with these core principles in mind. That means we offer competitive interest rates, fee-free accounts, credit cards with great perks, personalized customer service, and so much more than typical brick-and-mortar and online banks. We do whatever we can to ensure our members get what they need from us. These cooperative principles are one of the many reasons why people often prefer credit unions to banks. No matter what service you might need, from checking accounts to loans, credit cards, and anything else that banks offer, Suncoast keeps banking simple.
Benefits For Members Of An Insured Credit Union
Without a separate group of stockholders or private owners demanding a return on their investments, all net income in credit unions is given back to the membership directly in the form of lower rates on loans, higher earnings on deposits, great savings accounts, and more free services.
Comparing Financial Products and Services
If everything we've said already hasn't convinced you that a credit union is better for you than a federally insured bank, let’s take a closer look at the differences between specific products and services credit unions offer compared to the ones that banks do.
Savings Accounts
One of the biggest advantages that credit unions can offer is the potential for higher earnings on deposits. Unlike banks, where profits usually go to the shareholders instead of the customers, credit unions make sure their profits go back to their members. This means credit unions offer excellent interest rates on savings accounts, allowing account holders to see their money grow. That's even more true when it comes to investment accounts.
Banks are different. Because they operate with a for-profit mindset, their savings accounts don't have such high yields, and there are higher fees associated with them. Savers usually get lower interest rates from banks, and credit unions offer much better interest rates in comparison.
Credit Union vs Bank: Your Choice
We know that the choice between a credit union and a bank is a personal one that comes down to your preferences, financial goals, and personal values. No matter what you choose, your money will be safe, but with a credit union, you'll be banking with an organization that exists solely to serve its members. Plus, as a member, you get to own part of the credit union, and who wouldn’t want that?
