When you’re deciding where to keep your money, choosing between a credit union or a bank is a big decision. Both offer similar products and services, but the way they operate and the benefits they provide can be quite different.
People are increasingly turning to credit unions thanks to the financial perks and community-focused approach they offer. In fact, according to the National Credit Union Administration’s Quarterly Credit Union Data Summary, credit unions in the United States had roughly 139 million members in 2023, up 3% from the previous year and 45% from a decade earlier.
If you’re thinking about making a switch or want to learn more about the benefits of a credit union like Apple Federal Credit Union, we’re here to break down the key differences between credit unions and banks and how those differences can work in your favor.
What is a credit union?
A credit union is a not-for-profit financial institution owned by its members. Unlike banks, which are shareholder-owned, credit unions are created to serve specific groups of people, such as employees of a particular company, residents of a certain area or members of a specific organization.
When you join a credit union like Apple FCU, you’re not just a customer—you become a part-owner of the institution. This member-ownership structure emphasizes community and service over profits, which has long-term benefits for members.
At a credit union, profits aren’t paid out to shareholders. Instead, they are reinvested into the credit union, allowing it to provide better rates and lower fees to its members. Apple FCU, for example, reinvests in its members by offering competitive interest rates on Loans and maximizing returns on Savings products.
What is a bank?
Banks are for-profit financial institutions owned by shareholders. They often have larger, more widespread operations, sometimes stretching across the country or even internationally.
The primary mission of a bank is to generate profits for its shareholders, which can mean charging higher fees or offering less favorable rates on loans and savings products.
Banks operate with a profit-driven focus, and their main priority is increasing shareholder wealth, which doesn’t necessarily result in the best deals for you. If you’re looking for the best rates and services, a bank might not align with your interests.
2 Key Differences Between Credit Unions and Banks
Every financial institution is different. However, the differences between credit unions and banks boil down to two main factors: their ownership and their ultimate purpose.
Ownership Structure
Credit unions are owned by their members and operate on a not-for-profit model, which prioritizes member satisfaction and building better financial products.
Banks are owned by shareholders, and their primary focus is profit. As a result, banks may prioritize increasing shareholder wealth, which can lead to higher costs for customers and less favorable rates.
Purpose and Mission
As credit unions aren’t driven by maximizing profits, their mission is much different than a bank’s. A credit union’s mission is to serve its members by reinvesting profits into offering better financial products, like lower fees and higher interest rates on savings. Additionally, they focus on providing personalized member services and supporting community initiatives.
Banks are primarily driven by the need to maximize shareholder profits. Their services are designed with profitability in mind, which means they may charge higher fees and offer less competitive interest rates compared to credit unions.
5 Key Benefits of Choosing a Credit Union
Here are five ways joining a credit union benefits you, your wallet and your community
1. Lower Fees
One of the main perks of joining a credit union is lower fees. Credit unions generally charge fewer and smaller fees compared to traditional banks, which can save you money in the long run.
For instance, Apple FCU’s FREE A+ Checking account comes with no monthly service fees and no minimum balance requirements. This makes it easier for members, especially those starting out or looking for a simple banking option, to manage their accounts without worrying about unexpected costs.
2. Better Interest Rates
Another standout benefit of credit unions is their competitive interest rates. Since credit unions are not-for-profit, they can pass their earnings directly back to their members through better rates on loans and higher returns on savings.
At Apple FCU, competitive rates on products like Mortgages and Auto Loans can help you save on major purchases. Additionally, Savings products like Certificates and Money Market accounts come with higher interest rates, allowing your money to grow faster.
3. Personalized Service
What really sets credit unions apart from big banks is their personalized service. Credit unions like Apple FCU focus on building strong relationships with their members and making sure they feel valued. Since members are also part-owners, credit unions must ensure their needs are met.
At Apple FCU’s 21 branch locations, you’ll experience service that’s tailored to you. Whether you have a question about a Loan or need help with your account, our staff is ready to offer individualized support.
4. Community Focus
Credit unions are not just about banking—they’re about community. A core part of their mission is giving back to the areas they serve. When you join a credit union, you’re not just receiving financial services. You’re part of a movement that makes a difference in your community.
In 2023, Apple FCU donated $340,000 to local organizations and events, supporting causes that matter to the Northern Virginia community. We also participated in 97 community events and volunteered more than 2,500 hours toward charitable initiatives.
5. Member Ownership and Voting Rights
One of the unique and empowering aspects of credit unions is that every member is also a part-owner. Every person with an account has a voice in how the credit union is run, unlike at a bank where decisions are solely made by people who own stock in the company.
Credit union members vote on important decisions, including the election of the board of directors and important policies. This democratic setup means credit unions put their members’ interests first, not just profits.
Common Myths About Credit Unions
Despite their advantages, credit unions are sometimes overlooked due to misconceptions. Let’s dispel a few common myths.
Myth 1: Credit unions have limited access to ATMs.
Reality: Many credit unions, including Apple FCU, are part of nationwide shared branch networks, which means members have access to thousands of ATMs. Apple FCU provides members fee-free access to a wide range of ATMs, so you’re never far from your money whether you’re at home or traveling.
Myth 2: Credit unions have limited products compared to banks.
Reality: While it’s true that credit unions are smaller than big banks, that doesn’t mean they offer fewer products. In fact, most credit unions like Apple FCU provide a full suite of financial services. Whether you need Checking and Savings accounts, Credit Cards, Mortgages or even Business Loans, Apple FCU has you covered.
Myth 3: You must work in a specific industry to join a credit union.
Reality: Although credit unions started out with specific membership criteria, many now have much broader eligibility. For instance, Apple FCU has expanded its membership to include anyone living, working or attending school in Northern Virginia. So, even if you’re not part of a specific company or group, you can probably still join.
Why Apple FCU Is Right For You
Apple FCU membership comes with a range of benefits that may fit your financial needs.
As a member-focused institution, Apple FCU offers competitive rates on Loans and Savings accounts, personalized service and a commitment to community. By choosing a credit union, you will enjoy lower fees, better interest rates and have a voice in your financial institution.
Additionally, Apple FCU’s involvement in local charitable events and educational initiatives demonstrates a strong commitment to our community. Our members know that we’re not only helping them manage their finances, but we’re also making a positive impact where we live.
If you’re tired of high fees, poor service and feeling like just another customer, now is the time to make the switch. Join Apple FCU today and experience the difference in banking that puts you first.
