Banks vs. Credit Unions: Which Is Right for Veterans?

Banks vs. Credit Unions: Which Is Right for Veterans?

Both banks and credit unions offer special accounts to military members, whether they are currently serving or retired.

Accounts such as these cater to the individual needs of active-duty personnel (international branches on bases, 24/7 stateside assistance, and so on) but also honor active members and veterans through higher annual percentage yields (APYs), better insurance rates, lower APRs on loans, and other great benefits.

It’s natural for you to wonder: Should I open an account with a bank or a credit union?

Making the right financial decisions will be easier if you understand the differences between credit unions and banks and which may be best for veterans. Read on to learn how banks and credit unions differ and which may be better for military families.

Related Article: Military Banking for Veterans Handbook 2021

Differences Between Banks and Credit Unions: An Overview

Even though banks and credit unions provide many of the same products and services, there are notable differences.

  • Banks are for-profit businesses that charge more significant fees and have higher account minimums to open and maintain. Credit unions are not-for-profit entities that do not pay federal taxes, whereas banks do.
  • Shareholders run banks, and their goal is to maximize profits. Credit unions return 100% of their profits to their members by offering higher deposit rates and lower loan rates.
  • You must meet eligibility requirements and join a credit union to do business with them, whereas banks are available to anyone. So without needing to meet membership standards, you can stroll into any bank and apply for a loan or start an account.
  • Customers should expect sophisticated digital tools from online and traditional banks, such as mobile and online banking. However, credit unions may be technologically behind the times, particularly smaller ones.
Features Banks Credit Unions
Structure Profit-making Non-profit
Deposits interest rates Interest rates are generally lower at big national banks. Rates of interest are typically higher.
Deposit insurance FDIC insurance covers up to $250,000 per account. Up to $250,000 is insured by NCUA per account.
Customer service A lesser priority is given to interpersonal relationships. An emphasis is placed on local and personal involvement.
Access to Locations Regional banks do not have as many branches as national banks. Smaller branches count than banks, but they may share branches via a network.
Technology Apps and other tech are often rolled out faster. Generally lag in adopting new technology.


Membership vs. Non-Membership

As for-profit institutions, shareholders own banks and must produce profits for shareholders.

Anyone, including individuals and businesses, can open a bank account. You are a customer at a bank and have no voice or vote in how a bank is run.

Product Offerings

Banks provide personal and business banking services, such as business credit cards and loans. In addition, individual Retirement Accounts (IRAs), certificates of deposit, and money market accounts are examples of investment and savings options offered by banks.

Interest Rates

Whenever you’re looking for a loan of any kind, you should check with your local banks and credit unions. Although internet banks may provide lower rates than brick-and-mortar banks with an online presence, credit unions typically outperform banks in this area.


Banks typically have more and higher fees than credit unions because they must make money for their stockholders. Banks’ free checking accounts frequently come with conditions, such as minimum account balances or extra account types restrictions (like mortgages or credit cards).

Online Services and Technology

In comparison to credit unions, large banks have more money to spend on technology, and as a result, they tend to launch technical services much faster. In addition, banks are anticipated to have significantly more advanced mobile banking services. If technology and online banking are important to you, develop a list of the services you must have and request a demonstration before opening an account with a bank or credit union.

Related Article: How to Set Up Direct Deposit for VA Benefits

Credit Unions

Membership vs. Non-Membership

With a credit union, you are more than just a member; you are part owner. The people or members who use credit union services own and control credit unions.

In credit unions, the “field of membership” represents the common bond between the members. The field of membership may be a company where a person works, a school or religious institution, a geographical region, or membership in an organization.

While some credit unions are very selective about who can join, others are open to anyone with a membership fee.

Product Offerings

The products offered by credit unions tend to be fewer than those of banks, especially in commercial banking. Furthermore, credit unions, typically much smaller than banks, offer more limited investment options, such as checking and savings accounts and credit cards.

Interest Rates

Credit unions often provide low-cost or no-cost checking and savings accounts and other services. They also have some of the best lending interest rates. Credit unions are more likely than banks to offer better interest rates on savings products.


Many credit unions provide checking accounts with no monthly service fees and minimum balance requirements. Fees for banking errors, such as a bounced check, may also be lower at a credit union than at a bank, depending on the credit union.

Online Services and Technology

Unlike many small credit unions, national and worldwide banking corporations can have large technological budgets. Be sure to inquire about credit unions’ mobile banking technology and review their website for ease of use and offerings. Alternatively, national credit unions with digital banking options may be able to offer you the majority of the services you need.

Related Article: What Is the DOD Savings Deposit Program?

Is Your Money Safer in a Credit Union or a Bank?

As long as the institution is insured, your money is generally safe in either of the institutions.

The National Credit Union Administration (NCUA) insures deposits at credit unions. A government-backed bank’s funds are insured by the Federal Deposit Insurance Corporation (FDIC).

If a financial institution fails, you will get your money back up to the amount the institution is insured for. Your account will be transferred to a new institution in most circumstances, but your account number and amount will remain the same.

Related Article: Best Military Banks and Credit Unions for Veterans & Active Military

Credit Unions vs. Banks: Pros and Cons

Pros and Cons of Credit Unions

Offers lower interest rates on loans There may be fewer branches and ATMs
A higher annual percentage yield on savings vehicles Financial technology is less accessible
Financial education and outstanding customer service A smaller selection of products is available
Reduced fees and fewer charges Eligibility requirements to become a member
NCUA-insured accounts of up to $250,000
Communal engagement

Pros and Cons of Banks

Financial technology Interest rates on loans are higher
More products available. Savings accounts might offer lower APYs.
Funds are FDIC-insured up to $250,000. Higher and more frequent fees structure.
Accessibility and location convenience.

Which Is the Right Option for You?

You must determine what you need and desire from a financial organization before deciding whether to join a credit union or a bank.

While banks and credit unions both provide various products and services, they are not the same. For example, a bank may be a preferable option for customers who require nationwide ease, quick access to mobile banking, and diverse goods. On the other hand, consumers that require lower rates and fees, greater APYs, personal touch in customer service, and free financial education may benefit from a credit union.

Related Article: How Veterans Can Avoid Online Bank Fraud

The Bottom Line: Differences Between Banks and Credit Unions

So, is a bank or credit union better for veterans? The answer really depends on what you want out of a financial institution.

If you don’t care about ownership, the decision boils down to the items you want, as well as the rates and fees you want. You can also have the best of both worlds by keeping accounts at each.

Decide what’s most important to you, and then look for an institution that fulfills those needs.

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