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Big banks are impressive. Their presence spans across the U.S. They have gorgeous ads on billboards and radio stations and tv. I pass three Chase branches on my commute to work everyday. 

By looks alone it appears that big banks are the undisputed champs of the banking world. After all, when you’re neck-in-neck with Starbucks in a battle of “who can rent the most commercial space” it’s easy to assume you’re the alpha dog. 

But bigger isn’t better. 

For financial services it’s actually the smaller credit unions that come out on top. 

Core Difference

That’s right, those small homey bank-like places that your parents go to can be better than the big bank. But credit unions aren’t just smaller banks; they’re banks that fight for their members. 

Let me explain. On the surface they look similar. They both offer the same banking services and they both can be insured by the government

Where the difference lies is within their business structure.

  • Banks are for profit
  • Credit Unions are not for profit

Where Profits Go

There are several laws of nature. Birds fly, water is wet, banks want to make money. It’s not that credit unions don’t want to make money, you’d have to be crazy to not want to make money, but credit unions want to reinvest that money back into you. 

Meanwhile banks take their profits and give it to their shareholders. This is great if you’re a shareholder. If not (I know you’re not) then it’s a better deal to go with a credit union.

Credit unions give their profits back to you. Sometimes they offer direct dividend payments, but most of the time it’s through their services. So as a member of a credit union, you’ll get your money back through things like:

  • Better savings rates
  • Lower interest rates on loans
  • Lower account fees


Credit unions give money back to their members because as a member of a credit union YOU own part of the credit union. When you walk into a bank you own nothing. You can’t even take the pens because they’re chained to the counter.

But as a credit union member, you get to have a say in how that business operates. You do this by voting on who runs the credit union.

That’s neat, but that power doesn’t come easy. Credit unions have requirements to joining that banks don’t. These requirements are to help ensure that all the members of the credit union are working towards supporting their community. Banks don’t care about eligibility because their goal is to open up as many accounts as possible. The more accounts they open, the more money they’ll earn.

So joining a bank is easy, but again, credit union membership status has its perks.

  • You own part of the credit union
  • You get voting powers by being a member
  • You get access to those great rates

The Cost of Convenience

The nice part about being small is that you can get some really nice and personalized service. Infact, most credit unions will go out of their way to help you with your personal financial situation. 

Where banks make up ground is with their accessibility and bonus features. Those multiple branch locations spread across the globe are really convenient. Credit cards reward points are also nice. Mobile apps have always been just okay. 

It’s hard to compete with the scale large banks are able to achieve. But some credit unions do offer these features. Some also have multiple branches as well.

There’s also nothing stopping you from being a member of a bank AND a credit union. When you do need to go into a branch, remember that at a credit union you can expect:

  • More personalized service
  • Flexible financial planning

Final Thoughts

Banks are big and are convenient,  but credit unions are able to keep up with and even surpass the best banks have to offer. For being small, they sure hit hard. 

Never underestimate the little guy.