Differences Between Banks and Credit Unions - And Why You Might Consider Joining a Credit Union

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While many people are inspired to move their money out of corporate banks, not everyone is really sure what to do with it. You can’t hide it under a mattress, of course. Credit unions can be confusing and many banks aren’t exactly forthcoming about their practices. Here’s what you need to know:

Credit Unions

Credit unions are cooperative financial institutions that offer many (if not all) of the same services you would get at a regular bank. The difference is that when you open an account you become a MEMBER and an OWNER. That means it’s up to all of those banking there to keep the organization accountable. Of course, you can just open an account and forget about it, but if you choose to get involved you can join a committee or run for the democratically elected Board of Directors. Whereas banks have SHAREHOLDERS (outside investors to whom they are accountable), credit unions have MEMBERS. Your money is backed by the same Federal guarantee as a bank, but instead of FDIC it’s through NCUA.[1] You’re covered and it’s all good. They also tend to have an advantage in terms of interest rates in savings accounts or loans, because their interest is to benefit YOU and the other members, not the shareholders. Many also offer a wide range of great, free financial classes and management tools in terms of your personal banking and using that specific credit union.

Credit unions also focus on specific communities. They have strict limitations on who they can serve. This is where it can get difficult for some people to find a credit union to join. You must be within the field of membership in order to qualify for membership. It is specific to each institution. One way to think of it is this: you’re joining a community when you open an account. It is very difficult for credit unions to expand their fields of membership–the banks are interested in keeping them small so they don’t threaten their profits, so a lot of lobbying goes on–hence why there isn’t a national credit union we can all run and join right now. Look into field of membership requirements to see if you can join.

Credit unions are not all perfect just because they’re cooperative. Some may not be able to meet all of your needs. Check out the services they make available. Don’t get angry with them if they can’t meet your every expectation. They do not have the resources of the corporate banks. Expect it to be a different experience, be open-minded, and consider opening a savings account at a credit union if they can’t meet your needs for a checking account. It’s also worth noting most credit unions are actually part of a national credit union network. (They have a website and app too, so it’s easy to find out which ones.) This network allows you to deposit or withdraw money at any of the participating Credit Union’s branches/ATMs basically like it was your own. It will go straight into or out of your account no problem.

Last, Community Development Credit Unions (CDCUs) are focused on investing in communities which have been marginalized. You may already know that banks used to circle whole areas of city maps, in a process called red-lining, and then refuse to make loans to those areas. You won’t be surprised to learn the people in those areas were often people of color, immigrants, or low-income. Many of those neighborhoods are without banking services—people have to go MILES outside of their community in order to access a bank account. To address this, and to begin to develop economic security in those areas, CDCUS were formed and continue to fill the gap. If you qualify to put your money in a CDCU you will be able to do the most good with it. No question. That’s the best choice. You can find a list of them for every state here.


Not every bank is evil just because it has shareholders. Some do great things within this framework. They also are often able to offer additional services than credit unions, so they may be better suited to your needs. They fall into a few categories.

Some, like the labor bank Amalgamated, were formed to meet the needs of a specific community (in this case that of union members.) They offer free ATMs in every Duane Reade AND they are actively challenging corporate behavior as shareholders. There is a whole wing of Amalgamated devoted to shareholder advocacy, which means they push corporations on workers rights, among other issues.

Similarly, there are online banks like New Resource Bank, which is focused on environmental issues. There are more–you just have to dig a bit.

There are also community development banks–which like CDCUs focus on low-moderate income community economic development. The most famous one was Shorebank, which had successfully generated capital for a number of projects, but it closed last year. You might look into these options.

Other banks are small–like community banks in rural areas–but they can easily be bought by corporate banks. If you don’t want to have to move your money twice it is best to avoid them.


This article in its original format was created by SolidarityNYC. 'Go there to find more resources.