Banks vs. credit unions: How to decide where to keep your money

Banks and credit unions both offer a number of financial products, including savings accounts and certificates of deposit (CDs). The main difference between the two is that banks are typically for-profit institutions while credit unions are not-for-profit.

Another large consideration is whether you will qualify. Credit unions have restricted membership in some cases, and may require living in a specific area, working for a certain company or other restrictions.

Banks vs. credit unions

Pros and cons of banks

Pros of banks

• Wide access: Brick-and-mortar banks may have branches and ATMs down the street from where you work or live. Larger ones may also have locations wherever you travel across the country. Banks also have more locations than credit unions overall.
• Variety of options: Some of the largest banks in the country, such as Chase or Bank of America, are brick-and-mortar banks with locations across the U.S., but banks can also be small and local or regional and may provide more personalized service. There are also plenty of online-only banks as well.
• Potential for FDIC insurance: FDIC banks are insured for a standard amount of $250,000 per depositor, per FDIC-insured bank, per ownership category. FDIC banks are backed by the full faith and credit of the U.S. government.

Cons of banks

• Lower savings rates: Many of the large, traditional banks in the U.S. don’t offer competitive annual percentage yields (APYs) on their savings products. But some online banks with high-yield savings accounts do.
• High balance requirements or maintenance fees: Most brick-and-mortar banks are known for charging fees, though there are usually ways to waive them.m.

Pros and cons of credit unions

Pros of credit unions

• Higher rates: Credit unions are not-for-profit organizations owned by their members. Credit unions may have higher deposit yields than traditional banks.
• NCUA insurance: Federally insured credit unions are backed by the U.S. government. Your money is safe if a credit union fails. Check the NCUA’s Share Insurance Estimator to see how insurance rules apply to member share accounts to better understand what’s insured and if any amount exceeds the coverage limits.
• Personal connection: Credit unions tend to be local or regional and often service a specific community. As such, the service a credit union provides may be more personalized, and you may also be supporting an institution that upholds your values.
• Shared branches: Some credit unions might share branches, enabling you to bank far from home.

Cons of credit unions

• Limited access: Credit unions typically are local or regional and may not serve your area. It may not make sense to bank at a credit union that has no branches near you.
• Higher rates may be available at online-only banks: Online-only banks tend to have more competitive savings and CD yields.
• Membership requirements: You might have to live or work in a certain region to become a member of a credit union. The field of membership, which is the common bond shared by the credit union members, might have other requirements.

Bank and credit union trends

• The decline of overdraft fees: Various banks and credit unions have either cut or plan to cut or reduce their overdraft fees. Alliant Credit Union, Ally Bank and Capital One are just a few of the financial institutions that have eliminated overdraft fees.
• Increase in cost of overdraft fees: The average overdraft fee decreased to $26.77 in 2025, down 1% from 2024, according to Bankrate’s Checking Account Survey.
• Nearly half (47%) of checking account holders don’t pay maintenance fees on their checking accounts each month, according to Bankrate’s Checking Account Survey. 
• More households are gaining access to bank or credit union accounts: In 2023, 4.2% of households were “unbanked,” meaning they had no bank account, according to the FDIC. This is the lowest it’s been since the FDIC began the survey in 2009.

Are banks safer than credit unions?

FDIC-insured banks and NCUA credit unions have the same level of safety — as long as you’re within federal insurance limits and guidelines. Both FDIC banks and NCUA credit unions are backed by the full faith and credit of the U.S. government and offer similar protections. They protect up to $250,000 per depositor, per federally insured bank or credit union, per ownership category. 

The FDIC maintains the Deposit Insurance Fund (DIF), according to the FDIC’s website, and the NCUA manages and operates the National Credit Union Share Insurance Fund (NCUSIF), according to the NCUA’s website.

Bottom line

When shopping around for the right bank or credit union, always look out for fees, minimum balance requirements and what rates are offered on savings products. You might also want to consider accessibility — whether that be by branch location or by digital means.

Most people keep their bank account with the same institution for over a decade, so it pays to make a decision that you feel confident with. But don’t hesitate to switch to a new bank or credit union, especially when some institutions are offering yields that far outpace others.