Credit Union and Bank Interest Rate Comparison (2024)

FAQs

Credit Union and Bank Interest Rate Comparison? ›

On average, credit unions offer higher saving rates and lower loan rates. This could help group your savings grow faster and your loan will cost less. Credit unions also tend to charge lower fees, require lower deposit balances and offer better service.

Due to their non-profit focus, credit unions can offer the best interest rates to their members. What's more, credit unions can offer additional discounts if you sign up for automatic payments, make all of your payments in full and on time, or satisfy other eligibility criteria.

Credit unions tend to offer lower rates and fees as well as more personalized customer service. However, banks may offer more variety in loans and other financial products and may have larger networks that can make banking more convenient.

Cons of credit unions

Limited access: Credit unions usually serve a specific community or region, resulting in fewer branches and ATM access. Fewer product options: While credit unions offer many of the same products as banks, you may not have as many options for each as you would with a bank.

Better interest rates: Credit unions typically offer higher interest rates on savings accounts because they have lower overhead costs than banks. Similarly, they offer lower interest rates on loans. Customer service: Credit unions pride themselves on offering better customer service than banks.

As of September 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions offer high-interest checking accounts: Landmark Credit Union Premium Checking with a 7.50% APY and OnPath Credit Union High Yield Checking with a 7.00% APY.

The five largest credit unions are Navy Federal Credit Union, State Employees' Credit Union, PenFed Credit Union, SchoolsFirst Federal Credit Union and Boeing Employees Credit Union.

Why avoid credit unions? ›

Credit unions may be local or regional, with limited branches outside of your area. If you travel or move, this can make getting in-person help difficult. May have fewer services. While many larger credit unions offer all of the same services banks do, some provide a limited range of products and services.

Weaknesses of Credit Unions

Membership is restricted. The membership of a credit union is restricted to a specific community, most often a religion, profession, or geographic location.

Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.

By focusing on returning value to the membership, credit unions are able to offer rates that beat those of traditional banks. Plus, members typically have access to: More flexible lending decisions than traditional banks. Personalized member support.

The major difference between banks and credit unions is that credit unions have higher default rates than banks. banks distribute their profits to depositors. credit unions have higher loan rates and lower interest rates than banks. bank depositors get to vote for the bank directors.

Since credit unions don't have shareholders to appease, their primary objective is to offer the best financial services to their members at the lowest possible cost. As a result, credit unions are less likely to take on risky investments that could jeopardize their financial security.

In addition, credit unions tend to take lower risks compared to banks. They maintain conservative lending practices and focus on member services rather than profit. Because they are not driven by the same profit motives, they may be less exposed to risky financial behaviors that can lead to instability.