From brick-and-mortar behemoths to smaller online startups, there are a lot of options when it comes to banking. But banks, whether online or in-person, are not your only choice when choosing where to store your money. There are also credit unions to consider.
These financial institutions have a distinct member-owned and member-operated model that can confer a number of unique benefits to those who choose to join, from competitive rates and lower fees to a more personalized, community-focused feel. Increasingly, Americans are taking advantage. In 2025, credit unions “added 2.4 million members, bringing total membership to 144.7 million,” said CNBC Select, citing data from the National Credit Union Administration (NCUA).
What makes credit unions unique?
The biggest distinction between credit unions and banks is that credit unions are not-for-profit organizations that are owned and operated by their members, who elect a board of directors. Because of this model, any profits a credit union earns are returned to its members in the form of lower fees and higher rates. Banks, by contrast, are for-profit institutions that are owned by private owners or investors.
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To have an account with a credit union, it is necessary to become a member. Beyond that, though, credit unions offer many of the same account types and services as banks. Deposits are typically federally insured, up to the same limits as with accounts at banks, though through the NCUA as opposed to the FDIC.
What are the benefits of a credit union?
Arguably, the “biggest benefit is better rates because they work for members, not outside investors,” said Bankrate. Not only do “credit union profits go back to members, who are also shareholders,” but they also “enjoy tax-exempt status as not-for-profit organizations,” which means they do not have to pay taxes on their profits as banks do. This can materially affect the yields they can offer and the amount they collect in fees. Often, at credit unions, you will find “higher savings account rates and lower loan rates,” as well as “better yields on certificates of deposit (called share certificates at credit unions) and more competitive rates on mortgages and auto loans,” said Bankrate.
Another area where credit unions can shine is customer service. “Focusing on a community of people, they tend to pride themselves in treating everyone fairly and personalizing service the best they can,” which may materialize as “looking beyond just your credit score when approving you for a loan or offering you access to assistance like financial counseling,” said CNBC Select.
Are there any drawbacks to credit unions?
While credit unions probably sound enticing, they are not always easy to join. “Some credit unions have very specific membership requirements, such as military- and company-based credit unions,” said NerdWallet, though there are many more to choose from that do have easier-to-meet requirements.
It is also worth keeping in mind that while a smaller size can confer a more personalized service feel, it may also limit what credit unions can provide. “Banks get higher customer satisfaction ratings for the number and location of ATMs and branches, compared to credit unions,” said Investopedia, citing the American Customer Satisfaction Index survey. You may also find fewer account options and a more limited, or less sophisticated, digital presence.
