What’s the difference between a bank and a credit union? Which one should you pick for your financial needs?

At first glance, banks and credit unions seem similar. They offer checking and savings accounts. They have ATMs, debit cards and checkbooks. They issue CDs and offer money-market accounts, and typically, both will issue auto loans and home mortgage loans, as well.

But dig deeper, and the differences are stark.

A bank is a for-profit corporation. Many, but not all, are publicly traded on the stock market. One of its primary aims is to turn a profit for its stockholders. It judges activities based on what’s profitable for the company, and what’s not. It spends money on advertising, lobbying and assessing risks.

A credit union is a non-profit organization. Its primary goal is to serve its members, not its stockholders. If it generates excess money, it returns this to its members in the form of dividends. In most cases, any member of the credit union can campaign to serve on its Board of Directors. 

Deposits at all federal credit unions, just like federal banks, are insured and backed by the full faith and credit of the U.S. government.

Typically, fees and loan rates at credit unions are lower. Many people turn to credit unions to avoid ATM fees, checking account fees, and other nickle-and-diming treatment they receive from some banks.

However, services at credit unions may also be more limited. Some credit unions don’t offer business accounts, for example.

Which should you choose? If a credit union offers the services you need, you’ll typically enjoy lower fees by choosing that route. However, check out the specific offerings of the branches and businesses in your area, to find the one that’s right for you. Conversely, if you are looking for a specialized payment plan like a short term loan you can use online resources like the Personal Money Network as many banks and credit unions may not have the features or offerings that online sources can provide.