Both banks and credit unions offer similar services—checking accounts, savings accounts, loans, and credit cards—but they operate under very different models. Here’s a quick comparison, and why we think Freedom Credit Union and other credit unions stand out as a great option for most consumers.
Definitions
Let’s start by understanding four key financial concepts: banks, credit unions, fintechs, and neobanks:
Bank:
A bank is a for-profit financial institution that provides a wide range of financial services. Banks are typically regulated by government agencies and are owned by shareholders or investors, which means they are focused on generating profits for their owners. They can be local, regional, national, or international institutions and may cater to both individuals and businesses.
Credit Union:
A credit union is a not-for-profit, member-owned financial cooperative that provides services similar to those of banks. Unlike banks, credit unions are run by their members, who are also the institution’s owners. Profits are returned to members in the form of lower fees, better interest rates, and other benefits. Credit unions tend to be more community-focused and prioritize the financial well-being of their members.
Fintech:
Fintech (short for “financial technology”) refers to companies or technologies that aim to improve and automate the delivery and use of financial services. Fintechs typically leverage technology to make banking, investing, borrowing, and payment services more accessible, faster, and more affordable. Fintech companies usually partner with traditional financial institutions and their technology is used in the background.
Neobank:
A neobank is a digital-only bank that operates without traditional physical branches. Neobanks offer a wide range of banking services through mobile apps or online platforms. Neobanks are often considered a subset of fintech and are known for their user-friendly interfaces, lower fees, and innovative features.
Why Credit Unions Are Awesome: People Over Profit
Now that you know these terms, review our top 5 reasons for choosing a credit union for personal banking:
- Community-Focused: Credit unions are deeply rooted in the communities they serve. Rather than prioritizing profit, they focus on helping members improve their financial well-being.
- Better Rates & Lower Fees: Since credit unions don’t have to answer to shareholders, they can pass their earnings directly to members. That often means lower fees and competitive rates.
- Member-Centric Service: Credit unions are known for providing exceptional, personalized service. As a member, you aren’t just an account number—you have a say in how the institution is run.
- Ethical Operations: Because they are not driven by profit, credit unions often operate with a stronger sense of responsibility toward their members and the environment.
- Access to the Same Services: Many people assume that credit unions don’t offer the same range of services as banks, but that’s a misconception. With the rise of technology, most credit unions partner with fintechs to continue to provide comparable products and services to banks and other financial institutions.
If you have any questions about the technology we use or additional platforms that can enhance your banking experience, feel free to contact our team!
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