Credit Unions vs. Banks: What’s the Difference?

When choosing where to keep your money, it helps to understand the difference between a credit union and a bank. While both offer similar financial services, how they operate and who they operate for can be very different.

Credit unions are not-for-profit financial cooperatives owned by the people who use them, the members! When you join a credit union, you’re a part-owner. Banks are for-profit institutions owned by shareholders. Their primary goal is to generate profit for investors. Credit unions are governed by a volunteer board of directors elected by and from the credit union’s membership.

Due to credit unions being not-for-profit, earnings are returned to members in the form of lower loan rates, fewer and lower fees and higher savings rates. Banks typically reinvest profits back into the company or distribute to shareholders.

Credit unions offer competitive loan rates, lower account fees and more flexible lending options, whereas banks may charge higher fees and offer less personalized rates.

Credit unions are deeply rooted in the communities they serve. Decisions are made locally with a focus on helping members and supporting local initiatives. Banks may operate on a national or global scale, with decisions often made far from the communities they serve.

Because credit unions serve members rather than shareholders, they’re known for personal, relationship-based service. The members’ financial goals matter and solutions are often tailored to their needs. Banks typically rely on standardized policies and large-scale systems that are less personal to their customer base.

Both credit unions and banks are federally insured – credit unions are insured through the National Credit Union Administration (NCUA), while banks are insured through the Federal Deposit Insurance Corporation (FDIC).

Choosing a credit union means choosing a financial partner that puts people over profit. From better rates to local decision-making, credit unions are designed to help members succeed financially and personally.

At West Virginia Central, we’re proud to serve our members and our community with passion, excellence and innovation while following the “People Helping People” philosophy.