Bank or credit union: where should I open an account?
Short answer
A bank and a credit union are both safe places to open an account, and both offer checking and savings. Banks are insured by the FDIC and most credit unions by the NCUA, each up to $250,000 per owner and ownership category. The difference is that a credit union is member-owned and you must qualify to join.
By Alex Thomas · Founder of ITIN Club
Updated
How they compare
consumer.gov puts it simply: banks and credit unions offer the same services, but to join a credit union you must belong to a group it's allowed to serve.
| Feature | Bank | Credit union |
|---|---|---|
| What it is | A business that takes deposits and makes loans | A not-for-profit owned by its members, run by a board they elect |
| Who can open an account | Anyone the bank accepts after its ID checks | Members of its field of membership |
| Insurance | FDIC: $250,000 per depositor, per bank, per ownership category | NCUA: $250,000 per member, per credit union, per ownership category |
| Profits | Not paid back to customers | Returned to members as lower fees, higher savings rates and lower loan rates |
Both federal insurance funds are backed by the full faith and credit of the United States. Neither covers stocks, bonds, crypto or safe deposit boxes.
Who can join a credit union
MyCreditUnion.gov, run by the NCUA, lists the usual ways in:
- Employer: many employers sponsor their own credit union.
- Family: most credit unions let members' relatives join.
- Where you live: many serve anyone who lives, works, worships or studies in an area.
- A group: a school, place of worship, labor union or homeowners' association.
How to choose
Go with a credit union if you qualify for one nearby. The NCUA says that on average credit unions offer higher savings rates, lower loan rates and lower fees, and need lower balances. Go with a bank if you can't join one. Either way, compare the accounts and fees at a few places first, as consumer.gov suggests.
Want the full picture?
How to open a US bank account as a non-resident
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