What is the difference between a credit union and a bank?

Banks are for-profit corporations answerable to shareholders. Credit unions are nonprofit cooperatives owned by the people who deposit there, who are members rather than customers, and who elect the board. Because there are no outside shareholders to pay, credit unions generally return the margin to members as lower loan rates, higher deposit rates, and fewer fees. Deposits are insured to the same limits, by the FDIC at banks and the NCUA at credit unions, and the protection is equivalent.

Membership requires eligibility, historically tied to an employer, location, or association, though many credit unions now have broad fields of membership that most people in an area can join, sometimes by a nominal donation to an affiliated group. The tradeoffs are real: credit unions tend to have fewer branches and ATMs, though shared branching networks and surcharge-free ATM networks offset that considerably, and their apps and online tools have historically lagged large banks, a gap that has narrowed. Large banks offer broader product ranges, more sophisticated business banking, and more travel-friendly infrastructure.

The practical answer is often both. Credit unions frequently win on auto loans, personal loans, and mortgage rates, and on avoiding the fee structures that have drawn regulatory action against large banks. A national bank may win on credit card rewards, international access, and business services. Nothing prevents holding accounts at each and routing borrowing to whichever prices it better, which is what a rate comparison on your next loan will likely suggest.