Skip to main content Skip to footer
Back to all articles

Why You Should Choose a Credit Union Over a Large Bank

Learn the difference between a Credit Union and a larger bank. Explore which may be the best option for you.

Why You Should Choose a Credit Union Over a Large Bank

If you are considering where to open a new bank account or switch financial institutions, you may wonder whether a credit union or a large bank is the better choice. While both types of institutions offer similar services, such as checking and savings accounts, loans, and credit cards, there are several reasons why a credit union may be a better option for you.

1. Credit Unions Offer a Lot of What Large Banks Do

2. Credit Unions are Not-For-Profit Organizations

As a financial cooperative, these institutions are owned and operated by Members, which makes you a part owner and allows you to be a part of decisions. And as a not-for-profit compared to banks which are for-profit institutions, credit unions are not motivated by the desire to make a profit for shareholders, but rather by the goal of serving their members and community. As a result, credit unions are more likely to offer lower fees, higher interest rates on deposits, and lower interest rates on loans compared to large banks.

For example, credit unions may charge lower or no fees for services such as account maintenance, overdraft protection, and ATM usage. They may also offer higher interest rates on savings accounts and certificates of deposit (CDs), which can help you grow your savings faster. Additionally, credit unions may offer lower interest rates on loans, such as mortgages, car loans, and personal loans, which can save you money over the life of the loan.

3. Credit Unions Often Have a More Personal Touch

Credit unions are typically smaller and more community-oriented than large banks. That means they may focus more on providing personalized service to their members. Member champions at TDECU are often more approachable and willing to spend extra time helping Members with their financial needs. Additionally, credit unions may offer additional services, such as financial education, to help Members make informed financial decisions.

The personal touch can be especially beneficial if you have complex financial needs or are new to managing your finances. Credit union employees may be more willing to take the time to understand your specific situation and help you find the best products and services to meet your needs.

4. Credit Unions May Offer Better Rates and Terms on Loans

Because credit unions are not-for-profit organizations, they may be more willing to offer better rates and terms on loans to their Members. For example, they may offer lower interest rates on mortgages, car loans, and personal loans compared to large banks. Additionally, credit unions may be more flexible with their loan requirements, making it easier for members to qualify for a loan.

For example, credit unions may have lower credit score requirements or be more willing to consider alternative forms of collateral. This can make it easier for you to secure a loan, even if you have less-than-perfect credit or limited assets.

5. Credit Unions Offer a Wide Range of Products and Services

While credit unions may not have the same number of branches as large banks, they often offer a wider range of products and services. This includes checking and savings accounts, credit cards, loans, and investment options. In addition, credit unions frequently offer specialized services, such as loans for small businesses or low-income individuals. TDECU also offers wealth advising and insurance for Members and non-Members alike.

6. Credit Unions are Often More Involved in Their Communities

Because credit unions are often smaller and more community-oriented, they may be more involved in the communities they serve. This can include supporting local charities, sponsoring community events, and offering financial education programs. By choosing a credit union, you can support a financial institution invested in your community's well-being.

The Bottom Line

Choosing a national bank or a credit union is ultimately yours, and we hope you find the best fit. Credit unions are not-for-profit organizations that may offer lower fees, higher interest rates on deposits, and lower interest rates on loans than large banks; they often have a more personal touch and may offer better loan rates and terms. Credit unions offer a wider range of products and services and are more involved in their communities. By choosing a credit union, you can support a financial institution focused on serving its members and improving the community's well-being. If you still have more questions, feel free to browse our website and click around to learn more about our loans, credit cards, checking and savings accounts, mortgage, and Wealth Advisor services.

This blog was initially posted in 2017 but was rewritten in 2023.