Credit Unions vs. Banks: What’s the difference?

April 7, 2023

You spend Saturday mornings at the farmers market stocking up on fresh ingredients from Maryland farms. Every holiday season you buy gifts for the family at trendy Baltimore boutiques. And wherever you go, you have a shop local tote bag on your arm. It makes you feel good to support local businesses – and to know you’re reducing your carbon footprint. Plus, the customer service you get at local businesses can’t be beat.

Just like your favorite neighborhood mom and pop shop, credit unions are focused on community. SECU employees understand the unique financial challenges Marylanders face, so they can provide personalized service to our members. That’s just one of the many benefits of joining a credit union. A credit union can help consumers reduce their spending, maximize savings and ultimately achieve financial goals.

Keep reading to see how SECU helps you leverage the advantages of joining a credit union without forfeiting the convenience of online banking.

What is a credit union?

To put it simply, a credit union is a not-for-profit financial institution. They function very similarly to a traditional bank. Credit unions offer checking and savings accounts, credit cards, home loans and more – often at more affordable rates. However, unlike typical banks, credit unions are neither privately owned nor publicly traded. This is why we’re able to deliver financial benefits to our members.

Instead, the owners of a credit union are actually the members themselves – people like you, who put their money and trust into financial institutions like us. Rather than maximizing profits, credit unions work to maximize members’ financial benefits.

Who can join a credit union?

What also sets credit unions apart from banks is their membership makeup. As community-focused organizations, credit unions are able to offer more personalized services for members’ financial needs. Here at SECU, we’re focused on Marylanders.

A commonly held misconception about credit unions is that people need to meet specific eligibility requirements in order to join. However, most offer multiple avenues through which people can take advantage of the benefits of joining a credit union.

Want to take advantage of personalized service designed specifically for Marylanders? You may find your SECU connection through:

  • A current or past employer
  • Your college, university or trade school
  • Current or past association with a Maryland state agency
  • Affiliation with a state funded organization
  • A family member

Don’t have a connection? All you need to do is make a one-time donation to the SECU MD Foundation, and you can become a member for life.

Check out our eligibility requirements to find your SECU connection.

What are the differences between credit unions and banks?

Whereas credit unions are not-for-profit and member-owned, banks operate as for-profit institutions. What does that mean for you? Banks generally charge higher fees and increased interest on loans, and annual percentage yield (APY) on savings is lower than what you might find at a credit union. It’s generally cheaper to maintain a checking account or borrow a loan from a credit union.

Ultimately, the decision of whether to choose a bank or a credit union will depend on what you value in a financial institution. Banks can often offer greater commercial lending opportunities, but credit unions can offer affordable, personalized service.

Are credit union accounts federally insured?

Another common misconception about credit unions is that they’re less safe than banks, which are protected by the Federal Deposit Insurance Corporation (FDIC). The FDIC is a federal agency insuring bank deposits. Should a bank close, members’ funds are insured up to a certain amount.

Credit unions have a similar agency: the National Credit Union Administration (NCUA). Scroll to the bottom of our website, and you’ll see the NCUA seal. Those four letters mean that your deposits are protected and insured by the federal government just like they would be in a bank.

What are the benefits of joining a credit union like SECU?

Still unsure whether a credit union or a bank is right for you and your financial goals? Whether you’re looking to reduce your spending amidst inflation or save towards buying your first home, joining a credit union can help. You’ll spend less, save more and get support from highly trained individuals who understand your unique money matters as a Maryland resident.

Here are the advantages of joining a credit union like SECU:

  • Generally lower loan rates, higher deposit rates, and fewer & lower fees
  • Free financial wellness checkups for guidance on complex money matters
  • Personalized customer service experience
  • Access to Maryland’s largest credit union with 25 branches and over 50,000 free ATMS nationwide
  • Full access to your accounts through mobile banking

Seek a personalized banking experience

When you shop locally, you get better products and personalized service at a great value. Banking locally is no different. SECU members get the benefit of affordability and trust — with the convenience of online banking. Becoming a SECU member is simple. Find your SECU connection to get started today.

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