Credit Unions and Banks: What's the Difference?

Banks and credit unions look a lot alike. They both offer checking accounts, savings accounts and ATMs. They both make loans. But there are some big differences consumers need to keep in mind when choosing which type of institution they’re going to entrust with their hard-earned money.

Different bones

The differences between banks and credit unions run deep – all the way down to their fundamental structure and purpose.

Banks

For-profit enterprises held by private owners or stockholders.
Account holders are called “customers,” and the bank uses their money to make consumer loans and other investments.
Any revenue left over after the bank covers all its costs goes to its owners as profit.
Other than their ability to pick up and move their accounts, customers don’t have much say in what goes on at their bank, since the institution is expressly run for the benefit of the owners, not them.

Credit unions

Nonprofit enterprises (and thus exempt from most taxes).
Account holders are called “members,” and they all have an ownership stake in the credit union.
Like a bank, the credit union uses account holders’ money to make loans, but unlike a bank, any “profits” go back to members in some form.
The structure of credit unions generally gives members much more say over how the institution is run than customers at banks have.

Those dissimilarities can ultimately make a big difference to the consumer.

A credit union is not for profit, so if there are any profits, they’re usually returned to the members in the form of discounted lending, higher deposit rates and servicing the accounts.

Limited access

Another big difference: Not just anyone can join a credit union.

Practically anyone is free to open an account or get a loan from a bank. There aren’t many membership requirements, whereas credit unions are there for a specific group of people who share some commonality, and you need to be able to meet that requirement in order to join.

That “common bond (opens in a new tab),” as it’s known to regulators, could be anything from working for the same company or industry, to residing in the same town, to having family members who are eligible to join. But with more than 146 million members at federally insured credit unions in the U.S. alone, according to the National Credit Union Administration (opens in a new tab), most people who live in a reasonably populated area are probably in at least one credit union’s “field of membership.”

Still, that’s one reason credit unions tend to be smaller than banks – the largest U.S. bank alone holds roughly twice the assets of all the credit unions in the country put together.

Customer service

If you care about being treated like a human being when dealing with your financial institution, rejoice: Both banks and credit unions are capable of offering good customer service.

In fact, getting good treatment from your financial institution is more about size than it is about whether it’s a bank or credit union.

In a 2025 national customer satisfaction survey, credit unions averaged 79 out of a possible 100 points for overall satisfaction, nearly level with banks overall at 80. Regional and community banks scored highest at 83, while national banks came in at 79.

Customer service tends to be better the smaller you go down the chain. It’s about that local feel and personalized attention.

Of course, that small size can come at a cost: convenience. National banks generally have an edge over both smaller banks and credit unions when it comes to the availability of ATMs.

That’s despite the fact that credit unions often band together to share branches and ATMs to try and gain a larger footprint.

Fees and interest rates

Surveys have consistently found that a larger share of checking accounts at credit unions are free, meaning there’s no minimum balance requirement to avoid a monthly maintenance fee, than at banks.

And while a credit union will charge you an overdraft fee, just like your bank will, if you spend more than the balance in your checking account, the fee will probably be less. Overdraft fees at banks typically run roughly $27 to $35 per overdraft, depending on the survey.

Interest rates are another area where credit unions have an advantage on some products. Basically, banks, being for-profit businesses, pay as little interest on deposits as they can get away with because their obligation is to make as much money as possible for their owners. Credit unions, on the other hand, generally pay as much interest as they can afford to without losing money. (Yes, losing money is bad, even if you’re a nonprofit.)

That translates to credit unions paying higher rates on some savings products. According to the National Credit Union Administration, at the end of 2025 (opens in a new tab) credit unions paid an average of 0.74% on money market accounts, or MMAs, versus 0.52% at banks, and 2.95% versus 2.29% on one-year certificates of deposit. Banks paid slightly more on regular savings and interest checking.

Of course, getting 0.74% on an MMA over 0.52% probably isn’t going to make a huge difference to you financially, but if getting the best rates on your deposits is important to you, you’re more likely to find them on money market accounts and CDs at a credit union than at a bank.

Technology

While they’re generally equivalent to banks of similar size, credit unions typically lag behind the largest banks when it comes to fancy technology, mostly because they just don’t have the size or scale to compete with a behemoth.

There’s a huge difference, even within the banking industry. The technical capabilities of the larger operators simply take away any opportunities for smaller banks to compete. Ultimately, dollars buy technology and allow more things to happen, and in the banking industry, they’re not always prepared to spend the dollars.

That money pays off in mobile apps and websites with more features, more modern design and other perks for customers.

The funny thing is, a lot of consumers don’t seem to notice.

Still, if you’re the kind of person who wants to get the latest tech features first, you’re more likely to find that at a larger bank. They’ve simply got the resources.

Editorial note: Membership totals, deposit rates and customer-satisfaction scores are updated by their publishers every quarter or year. Figures reflect the latest data available in October 2026.