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You have a lot of options when it comes to finding the best place to stash your everyday cash. If you’re weighing the choice between a large national bank and credit union, here’s what to consider about the two types of financial institutions.
The differences between them may affect which home you choose for your checking account, savings account or certificate of deposit.
Why choose a credit union?
Typically has slightly higher interest rates on deposits than brick-and-mortar banks.
Emphasis on customer service.
» Learn more: What is a credit union?
Why choose a bank?
More branches in the region or across the country.
Typically quicker to roll out new apps and other tech.
» Learn more: What is a bank?
What to consider when choosing between a bank and credit union
Choosing between the two involves some trade-offs. On average, credit unions tend to offer higher interest rates on deposits and lower rates on loans. Banks often adopt new technology and tools more quickly, especially online banks, which are typically able to offer higher-than-average interest rates. Broad ATM and branch networks are the norm for national banks; credit unions might belong to large, cooperative networks of ATMs, such as Allpoint, and offer shared branches.
Banks are for-profit enterprises, while credit unions are not-for-profit. Credit unions in principle exist to serve a community of people tied by a “bond of association,” which may be based on location, employer, faith, membership in another organization or other factors. To serve its community, a credit union provides financial products on the most favorable terms it can afford to offer. However, credit unions sometimes carry membership fees and/or limit their membership to specific communities, so if you're considering one, check whether you qualify and whether there's a fee.
What fees does the bank or credit union charge, and how much are they? Ask about monthly maintenance and overdraft fees. Many banks and credit unions offer ways for customers to waive a monthly fee, such as having at least one monthly direct deposit or maintaining a minimum balance, but overdraft fees can get quite expensive, often in the range of $30 to $35, and can sometimes be charged multiple times per day.
How many branches and ATMs do they have? If in-person service matters to you, look at banks and credit unions that have local branches. A community bank might be a good choice if that's a priority of yours. If you just need to withdraw or deposit cash on a regular basis, then make sure you have enough ATMs nearby.
What interest rates does the bank or credit union offer? Check out the interest rates on whatever accounts you're considering from different banks and credit unions.
Deposit account rates
Usually lower interest rates, especially at large national banks.
Usually higher interest rates.
FDIC insures up to $250,000 per account.
NCUA insures up to $250,000 per account.
Personal interactions less of a priority. (Community banks may be an exception.)
Local and personal engagement emphasized.
National banks have many more branches; regional ones, not quite as many.
Fewer branches than banks, but may share branches via a network.
Often quicker to roll out new apps and other tech.
Generally lag in new technology.
Making your choice
Identify what matters to you most. Figure out which account and customer service features work best for your situation and make a prioritized list.
Narrow the list based on your top criteria. Other aspects to consider: Do some of the banks and credit unions on your list perform better in ways you might value in the future (such as having a great digital experience or extensive ATM access)? Do any negatives (higher fees, too few branches) change your mind about which to choose? Once you’ve found a bank or credit union that suits your needs, apply for an account.