Banks vs. Credit Unions: Where Should You Keep Your Money?

Have you ever considered the difference between a bank and a credit union?

You work hard for your money, so choosing the right place to keep it is an important financial decision. Whether you're concerned about security, convenience, or getting the most bang for your buck, understanding the differences between these two financial institutions can help you make the best choice. Many people use both, dividing their income between a bank and a credit union depending on their needs.

If you're a recent nursing school graduate starting your career as a registered nurse, this is the perfect time to understand your options and make informed financial decisions. Let's break it down:

Banks

Banks come in many forms, including local, regional, national, and international. They are for-profit institutions owned by private investors and shareholders. A bank's primary goal is to generate profit for its investors. A bank's structure affects how it operates and what it offers.

Pros of Banks:

• Widely available with numerous branches and ATMs

• Advanced mobile apps and digital banking tools

• Offer a wide variety of financial products and services

• Suitable for international transactions and business banking

Cons of Banks:

• Tend to have higher fees and loan interest rates

• Often offer lower interest rates on savings accounts

Security: Bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC), which covers up to $250,000 per depositor per bank.

Credit Unions

Credit unions offer many of the same services as banks but with a different mission. They are not-for-profit financial cooperatives owned by their members. Instead of focusing on profits, credit unions prioritize their members' financial health, which often translates to better rates and lower fees.

Pros of Credit Unions:

• Generally, offer lower loan rates and higher interest on savings

• Lower fees or no fees for standard services

• Focus on personalized customer service and member satisfaction

Cons of Credit Unions:

• Fewer branches and ATMs (though many participate in shared ATM networks)

• Smaller selection of products and less robust online tools compared to big banks

Membership Requirements: Credit unions typically require you to meet certain eligibility criteria, such as living in a specific area or working in a particular profession. However, many now allow almost anyone to join, sometimes for a small donation or membership fee.

Security: Credit unions are federally insured by the National Credit Union Administration (NCUA), up to $250,000 per account holder, just like the FDIC insures banks.

Final Thoughts: Choosing a Bank or Credit Union

Choosing between a bank and a credit union depends on your lifestyle, financial goals, and preferences. A bank might be your best bet if you value convenience and digital features. A credit union could be a great fit if you want lower fees and a more personal approach.

And remember, you don't have to choose just one. Many people keep a checking account at a bank for convenience and a savings account at a credit union to take advantage of better rates.

As you start your journey as a nurse, understanding your financial tools is one of the best investments you can make in your future.

Reference

Cagan, M., & Lariviere, E. (2017). The infographic guide to personal finance. 

Simon & Schuster.