Are you in a savings account dilemma and trying to decide if a bank or credit union is the best place to park your money?
Look no further! We’ve done the dirty work for you and have put together some important info to help you figure out which option will be most beneficial. Whether it’s better interest rates, convenience, customer service, or other great benefits—we cover the important topics so that you can make an informed decision about where should save your hard-earned cash.
Don't worry, we're taking an unbiased route with this article.
Get ready for some serious financial knowledge bombs —–it's time to ask yourself: savings accounts at banks OR credit unions??
Let's start with the basics. A savings account is a type of account that helps you save money gradually over time. By doing this, it allows you to plan for the future and protect your saved funds from being spent impulsively.
Having a savings account can be a great tool for financial health, but there are also some drawbacks that need to be considered. For instance, depending on the type of savings account, there may be fees assessed or limits on how often funds can be withdrawn. Additionally, savings accounts typically offer lower returns than other investment vehicles which means savings accumulate more slowly than they would otherwise.
Psst... There's more than one type of savings account you can choose from. Here's a look at what they are:
If you're thinking about interest on savings accounts, the amount of return could depend on the financial institution you open the savings account at. Hence the reason we're diving into savings accounts at a bank and credit union.
pros and cons to saving at a bank vs. credit union
Pros to saving at a bank
Often have more locations.Having a savings account at a bank typically offers more convenience with multiple locations and longer operating hours. Of course, if you go with a local bank, you might not have as much flexibility.
Savings accounts are insured by the FDIC.The federal guarantee of deposits up to $250,000 adds assurance that savings will remain safe even in cases of unforeseen financial calamity.
You’ll have a wider variety of products and services.Oftentimes, savings accounts at banks offer customers a wider variety of products and services
cons to saving at a bank
Banks offer lower interest rates than credit unions. Banks have shareholders and are for-profit corporations, so their end goal is to serve their shareholders which typically comes from fees and lower interest in savings and higher rates on loans.
Higher minimum balance requirements and other fees. Many banks often require account holders to have $25 deposit and pay a $5 monthly service fee. Often the service fee can be waived if the account balance is $300 or higher - depending on the bank.
No personalized customer service. Banks are not known for providing more personalized service to their account holders. You'll find banks are more focused on their
Any person, company, or institution that owns shares in a company's stock
. Whereas credit unions are member owned so you'll find they are dedicated to satisfying their members' needs. For example at credit unions, tellers remember their members name and their financial needs as soon as they walk in the door. Bank tellers
pros to saving at a credit union
Personalized Service.As an account holder - or shall I say "shareholder" - at the credit union, you'll receive personalized service where staff will go above and beyond to help you reach financial success. Unlike a bank, credit unions are not-for-profit and any member becomes part owner. The credit union’s entire purpose is to help the member by offering lower rates on loans and higher returns on savings.
Higher interest rates.You'll find interest rates on savings accounts are typically higher at a credit union than at a bank.
Have lower fees.Credit unions commonly have lower fees than banks
Savings accounts are insured by the NCUA. Credit unions are regulated by the National Credit Union Administration (NCUA), where they pay insured deposits to the member owning the account up to $250,000.
cons to saving at a credit union
Fewer account choices.Depending on the financial institution, credit unions may have fewer savings account choices than banks.
Limited branches. Depending on the financial institution, credit unions tend to have limited-service times and branch locations. Psst... at Skyla, Our Contact Center is available 24/7/365!
Credit unions require membershipbefore opening an account.
QUICK TIP: Anyone can join a credit union if you’re within the field of membership. Once you join, you become a member and part-owner of a credit union.
Take Skyla for example. To become a member you'll need 1 of 4 things:
You have an immediate family member who already has a Skyla account
Learn more about our eligibility for membership here>
how to decide where to open a savings account?
Ultimately, when deciding between a savings account at a bank or a credit union, it’s important to consider your individual financial needs and goals to make an informed decision.
What's the interest rate and APY?
Is there a required deposit? What's the amount?
Are there any fees that comes with having a savings account?
Is there accessible customer services when needed
In case you want to compare apples to oranges, here's a comparison chart to help you see the difference with having a savings account at a credit union and a bank:
MORE PHYSICAL BRANCHES AND ATMS
PERSONALIZED CUSTOMER SERVICE
HIGHER INTEREST ON SAVINGS
BECOME A MEMBER TO OPEN AN ACCOUNT
QUICK TIP:It might seem like all credit unions have a limited number of ATMs since credit unions are typically very regional, but that’s simply not true! Most credit unions joined an ATM network known as a CO-OP Shared Branch Network (known as the CU Cooperative Systems, Inc). The network provides a connection of fee-free ATMs between other credit unions allowing the member to access their money at more than 30,000 ATMs nationwide.
ready to open a savings account?
Ok so you got a good run down of the difference between credit unions and banks through our pros and cons list. Now it's a matter of determining which is better for you.
Are you looking for greater interest rates on your savings with a credit union, or would you prefer to become an account holder at a bank that has higher minimum balance requirements yet provides access to more financial institutions? Ultimately, the choice is yours.
Also, don't let the membership with credit unions scare you. Anyone can join a credit union as long as you’re within the field of membership. Once you join, you become a member and part-owner of a credit union.
You can learn more about credit unions vs banks so you'll have a better scope of which financial institutions may be best:
As always If you have any questions or comments, our Customer Service Representatives are here for you. You can send an email, give us a call at 704.375.0183, or visit any of our branches.
As the Content Specialist and author of the Learning & Guidance Center, Yanna enjoys motivating others by uncovering all that's possible in the world of finance. From financial tips and tricks to ultimate guides and comparison charts, she is obsessed with finding ways to help readers excel in their journey towards financial freedom.
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