Many teens are excited to get their first job and, more importantly, earn their first paycheck. Many may wonder, however, if banks or credit unions are better institutions for their savings goals.
On the surface, banks and credit unions look nearly identical. Both offer checking and savings accounts, mortgages, personal and auto loans, and financial literacy courses to help their clients make the best financial decisions possible. However, there are some differences in a wide variety of their characteristics that ultimately affect the services they offer and more. Banks often have more fees, including maintenance fees, overdraft fees, and ATM fees. Credit unions, on the other hand, are often more lenient in this area due to their nonprofit structure, bringing us to our next point of ownership structure.

Banks are institutions meant for making a profit and are owned by shareholders, while credit unions are nonprofit corporations. For this reason, credit unions often emphasize community and customer service due to their nonprofit status. This community drive also often leads to better interest rates on loans and savings due to credit unions’ prioritization of their members.

With all this in mind, joining a credit union can be a great financial choice, especially if this is what you are mainly looking for when evaluating a personal financial plan. However, there are several advantages that banks have over credit unions despite the numerous benefits that come with joining a credit union. For example, due to banks’ profit-based structure, they tend to offer more branches and ATMs, especially larger corporate banks that exist nationwide like Bank of America. On top of this, banks tend to have a wider variety of experts and larger employee bases, often giving banks more advanced technology, such as online banking tools, mobile apps, tech services, and more services like investment accounts, business loans, and specialized financial products, often giving bank account holders a wider range of financial opportunities.