How Do Credit Unions Stack Up to Other Banks?

Kelly Ann Butterbaugh

There are banks, and then there are credit unions. What are these credit unions, and how can they benefit bankers? It's worth the time to take a look at what they have to offer and invest a little money into a credit union as well.


What Is It?

A credit union is a bank. According to the Lehigh Valley Educator's Credit Union, it is a "cooperative, not-for-profit financial institution organized to promote thrift and provide credit to members." Credit unions are member owned and governed by elected board members. Often membership is limited by employers. For instance, teachers credit unions focus on educators and their families while other credit unions focus on factories and city employees.

What Can It Offer?

Credit unions offer all the services of regular banks plus a few extra perks such as:

  • lower loan rates
  • free checking with no minimal balance
  • interest on checking accounts
  • higher interest on savings

How Can They Do This?

Since credit unions are owned by the members, they do not operate at a profit. Instead, they work to create the most profitable options for the members rather than the shareholders who own typical banks.


What Are the Problems?

As with any institution there can be problems. Since credit unions are small, non-profit organizations they offer less convenience. Often time their hours are limited to weekdays only, and they usually offer only a handful of locations. ATMs may incur service fees since home banking isn't always available.

Another minor inconvenience of the credit union is the request to withdraw money. Large withdraws often take longer to process, and the limit of cash withdraws at the window are often lower than those of typical banks.

Can I Become a Member?

While the credit union of your choice may focus on educators in the area, it is not impossible to hold an account if you're not an educator. The primary pursuit for account holders may be in that stated profession, but family members are welcome to join as well. Most credit unions allow uncles, in-laws, grandchildren, and parents of the member to join as well. Regardless of any future professional changes, once a member always a member.


How Do I Benefit the Most?

While credit unions are valuable, many people opt to have accounts in both a credit union and a larger commercial bank. With the conveniences of the commercial bank and the savings of the credit union, the account holder can maximize his benefits with a happy balance between the two.

About The Author: Kelly Ann Butterbaugh is a freelance writer who regularly contributes to a variety of magazines and has written a history book for middle readers. Visit her website for writing help, lesson plans, history fun, or work for hire at

October 7, 20060 found this helpful

Now I know what I will do once my Mother's estate check comes in. :-)

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October 9, 20060 found this helpful

I have used Credit Unions for-- 40 plus years. They are pretty much as stated. I have also noticed they are friendlier, more helpful and tend to be interested in your needs-- not the "bank" needs. The size of the credit union will affect services. The current Credit union I belong to ( you join with $5.25 and keep that amount for the life of the account- subject to local rules), I acquired because they offered excellent interest rates on the new car I was buying. So-- I was "in"! I currently 1) on line bank-- no charge, 2) automatic withdrawal-- no charge, 3) automatic deposit-- no charge, 4) bought CD's at decent rates-- no charge for the service, 5) have "over draw" protection-- no charge, 6) check writing -- no charge, 7) ATM no charge at their branches, 8) ATM with currency exchange in Europe-- minimal charge ( I really think that was no-charge, too), 9) talking with tellers for problems--no charge, 10) wire transfer larger funds-- no charge. They are FDIC insured, too. I probably could go on and on. I have not met a bank that equals a Credit Union.

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November 1, 20120 found this helpful

I also have been a member of a credit union for many years and all the advantages listed are true, however, this free lance writer Kelly Butterbaugh is way behind on the times. She mentions them focusing on educators. For several years they were required by law to limit their membership to teachers and their families, however that law was changed a very long time ago -- at least 3 years ago. Now it makes no difference what your occupation is, anyone can join the credit unions -- and free themselves of all the outrageous fees that the banks charge. If you are currently with a bank, give a credit union a try--and you won't go back. I used to pay the bank many fees-- no longer. When the Credit Unions wanted to expand their membership the Banks fought them for a very long time to stop it, but finally lost the battle. They did not want the compition.


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